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The UNC Environmental Finance Center (EFC) typically focuses on the role of local governments in directly providing and funding basic community environmental services such as water, wastewater, stormwater, and solid waste management. For example, the EFC recently released a set of resources related to local government stormwater fees that local programs use to fund their stormwater services. These types of resources help local governments raise funds for critical environmental protection activities but there are other ways that local governments can play a role in supporting environmental finance.

Recent news out of Brunswick County, North Carolina, highlights the fact that local governments can have a significant impact on environmental expenses paid to other branches of government as well. In the case of Brunswick County, efforts by the county government to improve flood planning, preparation, and education led to the County earning a rating with FEMA’s Community Rating System (CRS). The rating will result in lower National Flood Insurance Program (NFIP) insurance premiums for property owners in the county that participate in the NFIP.

The CRS is an example of an interesting local government, federal government, and individual property environmental finance system partnership. The principle assumption behind the CRS is that local government efforts can improve a community’s resiliency and reduce private property damages associated with flooding.  A recent post on the EFC blog provides history and more background on the CRS program. Click here for a FEMA fact sheet about the program.

Participation in the CRS program is not automatic. Local governments must go through a process to enter the program that involves a series of planning efforts and commitments including participating in a comprehensive Community Assessment Visit (CAV) with state emergency management professionals. As of April 2018, 472 of the 660 cities and county unincorporated areas in the state had properties participating in the NFIP with 88 of those (15.7 percent) currently enrolled in the CRS program. Dare County has the most NFIP policy holders paying approximately $15.8 million per year or an average of $749 per policy. CRS ratings are based on the implementation of practices, policies and initiatives that fall into 19 general categories. CRS discounts depend on the class of rating and whether or not the property is in a high risk area and range from five percent to 45 percent.  The discounts increase as the rating decreases from 10 to one. Charlotte currently has the distinction of having the lowest rating of any North Carolina local government with a rating of four.

Local governments through the CRS have had a major impact on what it costs their residents to protect their property from flooding. Based on a conservative estimate of savings based on existing CRS discounts, North Carolina policy holders in the 88 communities that participate in CRS currently save approximately $11 million dollars each year in premium payments and 15 local governments save policy holders in their jurisdiction $250,000 or more each year. The map below shows the relative financial value of entering the CRS system and earning a basic rating of nine. As expected, the impact of the CRS is greatest along the coast, but there are many inland local governments where the CRS has or could result in significant savings as well.

The benefits of the CRS go well beyond saving individuals money on insurance premiums, and instead likely rests with the program’s ability to drive local measures that reduce the economic, environmental, and public health costs associated with floodingsomething that all levels of government and property owners likely can support.


This post was initially published on the Community and Economic Development (CED) blog on April 24, 2018.

Jeff Hughes is the director of the EFC at UNC. Jeff works with local governments, not for profit organizations, and private companies to identify and implement innovative methods of financing and maintaining environmental facilities and programs. Jeff has a Masters in Water Resources Engineering from the School of Public Health, University of North Carolina at Chapel Hill and an undergraduate engineering degree from Duke University. Jeff served as the Chatham County Public Works and Utility Director between 1996 and 1999. He has worked extensively overseas as an environmental finance specialist with the Research Triangle Institute, providing technical support and training assistance to local and national governments throughout Eastern Europe and Africa.

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