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Image of Non-linear incentives, plan design, and flood mitigation: the case of the Federal Emergency Management Agency's community rating system

Journal Articles

Non-linear incentives, plan design, and flood mitigation: the case of the Federal Emergency Management Agency's community rating system

Zahrana, Sammy - Personal Name; Brodyb, Samuel D. - Personal Name; Highfield, Wesley E. - Personal Name;

A basic proposition of 'agency theory' is that output-based performance incentives encourage greater effort. However, studies find that incentive schemes can distort effort if rewards for performance are discrete or non-linear. The Federal Emergency Management Agency's (FEMA) Community Rating System (CRS) is a flood mitigation programme with a non-linear incentive design. Under this programme, localities are incentivised to implement a mix of 18 flood mitigation activities. Each activity is performance scored, with accumulated scores corresponding to a percent discount on flood insurance premiums for residents that hold National Flood Insurance policies. Discounts range from 0 to 45% and increase discretely in increments of 5%. With multivariate statistical and Geographic Information Systems analytic techniques, tests are made to find whether observed changes in annual CRS scores for participating localities in Florida are explained by non-linear incentives, adjusting for hydrologic conditions, flood disaster histories, socio-economic and human capital controls that can plausibly account for local mitigation activity scores over time. Results indicate that local jurisdictions are discount-seeking, with mitigation efforts partially driven by the non-linear incentive design of the CRS programme. The paper ends with recommendations to improve the operation FEMA's flood mitigation programme.


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Detail Information
Series Title
Journal of Environmental Planning and Management
Call Number
-
Publisher
United Kingdom : Routledge Taylor & Francis Group., 2010
Collation
-
Language
English
ISBN/ISSN
09640568
Classification
-
Content Type
-
Media Type
-
Carrier Type
-
Edition
Volume 53, Issue 2 March 2010 , pages 219 - 239
Subject(s)
Florida
Flood mitigation
Community rating system
Non-linear incentives
Specific Detail Info
-
Statement of Responsibility
-
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No other version available

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Kemitraan Library
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Established in 2003, the Library of Kemitraan was originally designed to record and collect all Kemitraan and grantees publications. However, today it broadly develops and serves more sectors to expand the collection to facilitate research activities, particularly since the inception of the Knowledge and Research Management within Kemitraan.

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