Unintentional Racial Migration Outcomes of Flood Insurance Availability in High Flood Risk Areas

• In Event: Climate Inequities: Health, Migration, and Infrastructure in the Face of Disasters

Abstract

The National Flood Insurance Program (NFIP), created to mitigate the financial risks of flooding through federally subsidized insurance, has been widely criticized for encouraging residential development in flood-prone areas. Prior research documents that NFIP availability increases both housing development and population in high-risk areas. However, its differential impacts across racial groups remain understudied. This paper investigates whether the availability of NFIP coverage has contributed to racial disparities in migration patterns in historically flood-prone communities. To estimate the causal effect of NFIP availability on county-level racial demographics, this study leverages plausibly exogenous variation in the timing of Flood Insurance Rate Map (FIRM) issuance by the Federal Emergency Management Agency (FEMA). Receiving FIRMs is a prerequisite for NFIP participation and was rolled out in a manner that lacked systematic prioritization. A 1983 Government Accountability Office report states that FEMA set no clear criteria for FIRM updates, resulting in communities receiving maps at random, regardless of actual flood risk. This provides a credible instrument for estimating the impact of NFIP participation on demographic outcomes. The primary dataset combines county-level population data by race from the Surveillance, Epidemiology, and End Results (SEER) data (1979–2023) with community-level NFIP enrollment and FIRM issuance data from the OpenFEMA Database. Results indicate significant racial heterogeneity in migration responses. NFIP availability led to a 3% increase in the White population and a 2% decrease in the Black population in high-risk counties. Changes in Hispanic and Asian populations were modest. These findings contradict the conventional understanding that disadvantaged groups are typically “trapped” in environmentally risky areas due to liquidity constraints. Instead, the results suggest that the NFIP, while race-neutral in design, may have selectively subsidized White residents. Given that NFIP is overall voluntary in nature and requires paying upfront annual premium rates, it may have inadvertently subsidized continued White residence in flood-prone areas while pushing out less advantaged groups, who are less likely to afford flood insurance. This study makes three key contributions. First, it adds novel evidence on the racial implications of federal environmental insurance programs. Second, it demonstrates how ostensibly neutral policies can interact with structural inequalities to produce unintended but consequential demographic shifts. Third, it adds evidence that governmental policy is an important determinant of how minority groups react to environmental shocks. These findings have critical implications for the design of future climate adaptation policies and their equity outcomes. 

 

Author

• Sungha Jo, Indiana University
  Presenting Author