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Federal Financial Exposure to Natural Catastrophe Risk

Federal Financial Exposure to Natural Catastrophe Risk

(p.61) 4 Federal Financial Exposure to Natural Catastrophe Risk
Measuring and Managing Federal Financial Risk
J. David CumminsMichael SuherGeorge Zanjani
University of Chicago Press

This chapter draws on a wide variety of government and private-sector data sources to document the size and causes of various expenditures from 1989 to 2008. The analysis suggests that these expenses, which have been escalating rapidly, are to a large extent predictable and therefore could be better accounted for and controlled. The chapter makes a case for the likely continuing high rate of federal spending growth for catastrophes. One reason for the steady and protracted cost growth is the increasing value of infrastructure exposed to catastrophe. Disaster relief expenditures have been the most significant component of federal catastrophe exposure. Another driver of cost growth is the political process. While some of these obligations are explicit in the law, much of the assistance that is provided is “discretionary.”

Keywords:   expenditures, federal finance, natural catastrophe, infrastructure, disaster relief, political process

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