The Federal Emergency Management Agency could simplify or amend the required benefit–cost analysis process in applications for hazard mitigation assistance to be more inclusive of lower-resourced communities. Homeland Security Operational Analysis Center researchers explore how the process could be simplified to be more inclusive of lower-resourced communities.
The Cost of Cost-Effectiveness
Expanding Equity in Federal Emergency Management Agency Hazard Mitigation Assistance Grants
- How could the BCA process be simplified to be more inclusive of lower-resourced communities?
The Federal Emergency Management Agency (FEMA) operates multiple hazard mitigation assistance (HMA) grant programs as a way to promote a national culture of preparedness and public safety, mitigate the consequences that disasters have for communities and infrastructure, and reduce future draws on the Disaster Relief Fund. The Robert T. Stafford Disaster Relief and Emergency Assistance Act requires FEMA to ensure that these mitigation activities are cost-effective. To determine cost-effectiveness, FEMA currently requires any project seeking HMA grants to include a benefit–cost analysis (BCA), implemented in accordance with Office of Management and Budget Circular A-94. Applicants for mitigation grants have provided extensive feedback that the BCA process is cumbersome and that finding the right data to include in the calculations of costs and benefits is difficult. FEMA is concerned that the administrative burdens and the costs of application processes could discourage subapplicants with fewer resources from applying or place them at a disadvantage in developing quality applications. Furthermore, two 2021 executive orders direct federal agencies to achieve greater equity and fairness in allocating federal resources. Two HMA grant programs have been selected as pilot programs for the corresponding federalwide Justice40 Initiative. The authors found that FEMA's dual goals of equity and simplicity occasionally compete, that FEMA has the authority to implement recommended changes, and that FEMA's approach to BCA differs from those of other federal entities. The authors identify nine changes that FEMA could implement to address the inequities introduced by the use of BCA in the HMA grant process.
- FEMA's dual goals of equity and simplicity occasionally compete.
- FEMA has the authority to implement recommended changes.
- FEMA's approach to BCA differs from those of other federal entities.
- Replace the BCA with a simpler measure of cost-effectiveness.
- Establish a minimum cost threshold or other criteria for a full BCA.
- Allow applicants to include alternative discount rates.
- Consider broader types of benefits.
- Apply distributional weights to benefit and cost calculations.
- Incorporate BCA and ratios more clearly into the award decision.
- Change FEMA large project notification reporting practices.
- Precisely specify benefiting areas.
- Encourage applicants to solicit subapplications from disadvantaged communities.
Table of Contents
FEMA Hazard Mitigation Assistance Grant Programs
Equity in Hazard Mitigation Grant Programs
Legal, Regulatory, and Policy Issues
BCA in Other Federal Investment Programs
Possible Changes to the Use of BCA in the Hazard Mitigation Assistance Grant Process
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