Flood Insurance Pricing
Last week marked the two-year anniversary of Hurricane Sandy’s landfall on the US East Coast, which resulted in more than $50 billion worth of damage. Flood damage from Sandy was severe. For New York City, new flood insurance maps are being finalized in 2016. These new maps might cause “the number of city dwellers living in an area where flood insurance is mandatory [to] nearly double from 218,000 people to 400,500 people.”
In a new blog post (and related RFF discussion paper), RFF’s Carolyn Kousky and Leonard Shabman discuss factors that cause the pricing of National Flood Insurance Program (NFIP) policies to differ from those of private companies. They point out that “NFIP pricing has incorporated other program goals that are at times at odds with its ability to cover payouts for all insured losses out of program revenue,” contributing to the NFIP’s estimated $24 billion debt.
EU Emissions Deal
The European Union has reached an agreement to reduce its total emissions by 40 percent from 1990 levels by 2030, a move that it hopes “will send a strong signal to other big economies and all other countries.” The deal represents a significant collaborative milestone ahead of the United Nation’s 2015 Paris climate conference, though some environmental groups view it as a “weak compromise,” thanks to a number of regulatory provisions used to accommodate carbon-heavy and regulation-averse countries.
In the current issue of Resources magazine, RFF’s Dallas Burtraw notes that climate action by the European Union is also being hobbled by an emissions allowance surplus within its “key weapon” —the EU Emissions Trading System. Burtraw writes: “The surplus has created a problematic decline in the price of emissions allowances, which dropped as low as €2.81 in April 2013. . . . While low prices are generally good news, these are an order of magnitude lower than the estimated €32 to €63 needed to motivate investments necessary to achieve the European Union’s emissions reduction target.”
