Benefits and Drawbacks of the National Flood Insurance Program

As amended by the 1973 Flood Disaster Protection Act, the National Flood Insurance Program (NFIP) offers communities across the country insurance protection against flood damages in return for the institution of land-use controls guiding development away from flood-hazard areas. The bargain seems fair on the surface, and many communities have subsequently enrolled, but growing doubts as to the program's efficiency and equitability now lead many to conclude that enrollment in NFIP is, in many instances, undesireable. What are the actual consequences for development implied by NFIP? Is the insurance end of the program working at odds with the land-use control aspect? What does the act imply for a town whose business district lies wholly or partially within the 100-year floodplain*? While it is too early to give definite answers to these questions, a careful examination of the flood insurance program points to a number of possible problems