Staying Safe From Disasters Pays, but Will Funders Listen?

Work is underway to show the economic benefits of investing to make cities and communities more resilient, by Megan Rowling, Thomson Reuters Foundation

Flooded areas of Baton Rouge, Louisiana, August 2016. U.S. Coast Guard photo by Petty Officer 1st Class Melissa Leake

NEW ORLEANS, March 13 (Thomson Reuters Foundation) – After Hurricane Sandy battered New York in 2012, American entrepreneur Ramsey Green and his partners came up with an innovative way to protect houses from extreme weather – one that would also be affordable for their occupants.

The startup MyStrongHome, which works in the coastal areas of Alabama, Louisiana and South Carolina, allows homeowners to pay for a new, reinforced roof out of savings from the lower insurance bills they get thanks to their dwelling being safer.

Green estimates that potential losses in a storm would be 30 to 60 percent lower in the strengthened homes. The work, carried out by the firm’s contractors, typically costs around $10,000. Participants make a down-payment of between $2,000 and $3,000, and pay back the rest over five to seven years.

“There is also a public benefit in terms of people not being displaced in a disaster,” Green said this month at a New Orleans conference on resilience, which tackled how to fund projects that help cities, communities and individuals stand up to disasters and other threats.

When it comes to reducing risks, the problem is not a shortage of ideas but rather a lack of cash to put them into practice, said experts in the city that has largely bounced back from the destruction wrought by deadly Hurricane Katrina in 2005.

Phillip Kash, a resilience consultant with urban development group HR&A Advisors, said it remained a challenge to turn into revenue the gains from equipping real-estate developments and other infrastructure to better withstand storms, floods and other natural hazards.

“The resilience benefits aren’t the benefits that are paying for the projects yet,” he told a discussion on bankrolling such efforts.

That is why philanthropic dollars from organizations like The Rockefeller Foundation – which backed the development of MyStrongHome – or government grants such as the U.S. National Disaster Resilience Competition are key to making the case that investing in stronger property and community cohesion yields financial returns, he added.

‘Resilience Dividend’

New Orleans Mayor Mitch Landrieu said it was still harder to persuade elected representatives to pay for measures to reduce disaster risks before a crisis than to get them to appropriate money to clean up after one.

“We haven’t done a good job of telling that story of why it makes no sense not to invest upfront in resilience,” he said. Having concrete examples of the financial benefits of doing so to feed into public policy discussions would help, he noted.

Efforts are underway to quantify what has been labelled the “resilience dividend”, with the New York-based Rockefeller Foundation leading the charge.

Together with the RAND Corporation, a non-profit research organisation, it has developed a model to value the economic and social worth of resilience work, in the hope of enlisting more support from decision makers.

In one case, RAND assessed projects by aid agency Oxfam in southeast Pakistan that aim to cushion farmers from the negative effects of food price swings.

To cut their reliance on loans from middlemen and crop losses due to extreme weather, farmers received a season’s worth of agricultural inputs, while grain banks and cooperatives were set up.

RAND estimated Oxfam’s intervention increased agricultural income by approximately 20 percent – or $400 – per household in the year after it was made, enabling families to spend more on farm equipment and goods at local businesses, or on their children’s education.

Longer term, farmers changed the way they worked, using new fertilization and cropping practices, it found.

City Budgets

At the New Orleans conference, Janice Barnes, global resilience director with architecture and design firm Perkin+Will, emphasised the importance of understanding how risks can escalate across society.

In a community that is regularly flooded, for example, mold in homes may lead to chronic disease problems, making it a public health issue that goes beyond property damage.

Identifying good reasons to prevent flooding – in this broader sense – can help open up more funding streams and a wider range of potential backers, she noted.

Jeff Hebert, chief resilience officer for New Orleans, said cities should try to be creative with the existing cash in their municipal budgets rather than always seeking new sources.

“Look at the large amount of money you already have. Figure out how to program that in the ways that make sense to build a more resilient city – and then also add on the funds (you) want to get outside of that,” he told the conference.

New Orleans, for example, has an annual budget of over $1 billion which can be used to boost the city’s resilience across the board, Hebert said. But it has also won a national government award of $141 million to demonstrate how building green infrastructure in one district can reduce flooding and improve wellbeing.

As cities are waking up to the need to bolster themselves against the growing risks of climate change and surging urban populations, more are earmarking funds for that purpose.

Almost 30 of the 100 cities in a network backed by The Rockefeller Foundation have pledged to commit 10 percent of each year’s budget towards resilience-building goals and projects without raising additional funds or taxes, noted Samuel Carter, the foundation’s managing director.

Meanwhile, New Orleans has recently adopted a policy that all municipal departments should consider how they can help meet the goals of the city’s resilience strategy when planning budgets, he added.

“That is transformative,” he said.

Reporting by Megan Rowling, editing by Laurie Goering for the Thomson Reuters Foundation, the charitable arm of Thomson Reuters.