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Flooding remains a major problem for the United States, causing numerous deaths and damaging countless properties. To reduce the impact of flooding on communities, the U.S. government established the Community Rating System (CRS) in 1990 to reduce flood damages by incentivizing communities to engage in flood risk management initiatives that surpass those required by the National Flood Insurance Program. In return, communities enjoy discounted flood insurance premiums. Despite the fact that the CRS raises concerns about the potential for unevenly distributed impacts across different income groups, no study has examined the equity implications of the CRS. This study thus investigates the possibility of unintended consequences of the CRS by answering the question: What is the effect of the CRS on poverty and income inequality? Understanding the impacts of the CRS on poverty and income inequality is useful in fully assessing the unintended consequences of the CRS. The study estimates four fixed‐effects regression models using a panel data set of neighborhood‐level observations from 1970 to 2010. The results indicate that median incomes are lower in CRS communities, but rise in floodplains. Also, the CRS attracts poor residents, but relocates them away from floodplains. Additionally, the CRS attracts top earners, including in floodplains. Finally, the CRS encourages income inequality, but discourages income inequality in floodplains. A better understanding of these unintended consequences of the CRS on poverty and income inequality can help to improve the design and performance of the CRS and, ultimately, increase community resilience to flood disasters.

 

This study explores whether participation in the US Federal Emergency Management Agency’s Com- munity Rating System (CRS), a voluntary community flood risk management program, is a function of policy diffusion or an act of free-riding. Policy diffusion would suggest that, all else being equal, once a community has joined the CRS, neighboring communities will be more likely to follow their lead and participate in the CRS. Free-riding would imply that neighboring communities might choose not to participate in the CRS because they perceive that their community benefits from surrounding communities’ participation. Results indicate that a community’s decision to participate in the CRS is not influenced by the characteristics of or the behavior of their neighbors. The results of this study do, however, show that population density, aggregate housing values, rentership rate, and flat topography are significant predictors of CRS participation. 

This study presents the first systematic literature review of academic research on the FEMA Community Rating System (CRS) program. The CRS is a voluntary program created in 1990 as a means to incentivize communities in the United States to implement floodplain management activities that surpass those required under the National Flood Insurance Program. As participating communities adopt additional flood mitigation measures, flood insurance policyholders in those communities receive reductions in their flood insurance premiums. To identify studies for inclusion, the authors searched three academic databases using the keywords “Community Rating System” and “Federal Emergency Management Agency” and “Community Rating System” and “FEMA.” The search uncovered 44 studies that met the selection criteria (e.g., peer-reviewed, focus on CRS, and empirical) and are included in the review. The findings provide significant insights into the current state of research on the CRS. This paper concludes by providing some recommendations to policymakers aiming to enhance communities’ resilience to floods and by outlining a future research agenda for the academic and practitioner communities. 

Floods remain the most destructive natural hazard worldwide. Understanding and improving flood management at the community scale (i.e., levels larger than the individual or household, but smaller than regions, states, or nations) is important in order to reduce communities’ vulnerability to floods. The growing literature examining flood management at the community scale has not emphasized analysis of the impacts of a flood-risk management policy on migration and development. We contribute new evidence on the impact of the Community Ratings System (CRS), a community scale federal program, on migration and development in the United States. The CRS program was created in 1990 to enable communities to voluntarily reduce flood risks, and in return, receive discounted flood insurance premiums. Using panel data (1970–2010), the study estimates fixed-effects regressions with robust standard errors clustered by group. The results indicate that the CRS discourages new construction and the construction of mobile homes or trailers in participating communities. Also, the CRS discourages population growth, but encourages people to stay in CRS participating communities. The study will benefit both academics and practitioners by helping to illuminate the impact of the CRS on migration and development, and improve our understanding of community-scale flood risk management.