Financing Disaster Mitigation, Preparedness, Response, and Recovery

A disaster can result in severe economic consequences for an afflicted area. State and local monies deplete rapidly, costly liability demands arise in court, and insurance claims increase quickly, placing the community in an unexpected economic crisis. After the May 1983 earthquake in Coalinga, California, the city manager noted: One of the most important things learn about managing an emergency is that costs will skyrocket, and property values will fall, as will sales tax revenues, if there is much damage commercial buildings.' The city manager also stated that, to run the city and pay for the earthquake, knowing about and working with the Federal Emergency Management Agency (FEMA) and the state are most necessary.2 More than 60,000 families suffered the consequences of natural and man-made technological disasters and received federal help in 1983, an average year of major disasters. FEMA responded 21 major disasters declared by President Reagan during the year, which amounted the distribution of more than $1.1 billion.3 The money was used help citizens recover and supplement repair of state and local government facilities. Severe winter storms and flooding in California were the most costly natural disasters requiring federal assistance in 1983 with the federal government paying out an estimated $308 million more than 17,000 families. During the same year, the private insurance industry nationwide paid record damage claims of $1.9 billion.4