State Policy Options
In tandem with the federal government, states are changing their approach to disaster management through policies that emphasize disaster mitigation, infrastructure resilience, and centralized planning. Mitigation measures in particular—such as building code improvements, natural infrastructure investments and updating land use and development practices—are often very effective in reducing disaster damage costs in communities, amounting to many times the initial investment.
In addition to appropriating funds to support mitigation activities, state legislatures are also responsible for the general oversight of those activities. Today, many states are looking at ways to streamline and centralize these functions under one person or office. This can be an effective approach given the number of federal agencies involved in helping states prepare for and respond to disasters and the complexity of the various funding mechanisms. This is just one of many things that have changed over the years as states try and manage the elevated risk associated with disasters.
A Whole of Government Approach to Mitigation
To date, at least 28 states and the District of Columbia have created a position, office, or task force to streamline planning and project oversight for disaster mitigation and climate resilience projects. For many states, the position is known as a chief resilience officer, or CRO. Through resilience planning, states can:
- Better understand the impacts of environmental disasters and the resources available to prevent or lessen these impacts.
- Support local communities in their efforts to protect their infrastructure and citizens and recover more quickly from natural disasters and climate-related challenges.
- Assist communities with identifying and addressing their vulnerabilities, cataloging their resources and understanding how mitigation activities can lower the costs associated with natural disasters and other major events.
- Coordinate actions and build alignment across all state agencies, as disasters impact the infrastructure and services provided across all sectors (health care, education, corrections, etc.) to ensure each agency’s mission can be achieved.
- Streamline processes for tapping into federal, state and private funding that will support mitigation and resilience activities, track how the resources were spent and shed light on the return on investment for various efforts.
Offices of Resilience
At least 14 states—Alaska, California, Colorado, Delaware, Louisiana, Massachusetts, Michigan, Mississippi, New Jersey, North Carolina, Oregon, South Carolina, Vermont and West Virginia—have established state resilience offices or similar state-led programs. Legislation can create and fund CRO positions or resilience offices. Where legislatures have crafted bills to create a CRO position or office, they often identify a funding source or make an appropriation to fund the officer and any additional support staff needed to carry out their work.
Task Forces, Working Groups, and Commissions
States such as Maine, Nevada, Louisiana and Washington, have created task forces, commissions or working groups tasked with evaluating adaptation strategies and recommending resilience planning activities. Advisory councils or task forces are often established to conduct initial resilience related research, interface with local communities and provide reports to state officials, or they can help support broader resilience efforts. Often when states create a CRO, they also form an advisory council, or a task force consisting of representatives of various agencies and designate the CRO as chair or leader.
- Colorado: The Colorado Resiliency Office, launched in 2013 following significant wildfire and flooding events, released its initial framework in 2015 and has subsequently developed numerous resources on hazard planning, resilience and recovery—making it a multi hazard, interagency roadmap to address disaster mitigation, planning, and response. For example, the office develops a resiliency and community recovery program; examines long-term recovery, including how to rebuild in a resilient way after an event; provides state and local technical assistance; integrates resilience into state investments and grant programs; and plans to improve coordination among state agencies and local jurisdictions to support community and economic recovery efforts and to address risk reduction.
- Louisiana: Louisiana is taking a whole-of-government approach to state government to ensure communities have access to critical community lifelines like health care, education, jobs and housing, to thrive in the face of increasing risks. First established by executive order and then codified by Act 315, Louisiana established a chief resilience officer within the governor’s office, a resilience coordinator in every state agency that collaborate through a working group, and the Louisiana Resilience Task Force. The effort to date has resulted in an initial Adaptive Governance Initiative report released at the end of 2022 and a 2023 Statewide Resilience Annual Report. This report details the scale of the environmental challenge confronting state agencies today and in the future through vulnerability assessment of their physical assets like infrastructure and social assets, including programs, services, and employees, as well as assessing potential adaptation and resilience actions.
Access to risk-related data can change both policy and behavior and improve preparedness. As more and better data becomes available, questions as to how and with whom that data is shared are top of mind. To that end, states are exploring disclosure mechanisms to ensure that property owners and prospective buyers have access to the information they need to make informed decisions around building retrofits, more resilient building practices and securing proper levels of insurance. For example, in the United States, flooding is the most common disaster, leading to billions in annual losses. Yet few people fully understand the level of risk faced by their residence, business and community. FEMA released a report in 2022 on state requirements for disclosing flood risk during real estate transactions covering common disclosure types and insurance policy penetration rates. Without disclosure, the costs of rapidly rising insurance rates can be hidden, potentially putting vulnerable families at risk of increasing financial burdens and even foreclosure and can influence overvaluation. Across the nation, significant differences are found in overvaluation between those counties with and without disclosure. For example, in Florida, where there is no disclosure law, properties are estimated to be overvalued by more than $50 billion.
State flood disclosure laws can inform prospective buyers of the following:
- Whether or not the property is located within a FEMA designated flood hazard zone, acknowledging the projected expansion of the floodplain and referring to state sea level rise-adjusted floodplain maps where available.
- Whether or not the property is located within a wetlands area.
- Prior physical damage caused by flood to a structure on the property.
- Prior insurance claims for a flood-related loss on the property, or notification regarding designation as a repetitive loss structure (including amount).
- Obligations to obtain and maintain flood insurance.
- Existence of a flood elevation certificate on the property.
As more states consider legislation on disclosures, they will likely cover a broader range of disasters including wildfires, tornadoes, etc.
- New Jersey legislators passed Senate Bill 3110 in 2023 requiring sellers of real property and landlords to disclose knowledge of a property’s history of flooding, flood risk, and location in a flood zone or area, as well as the availability of insurance through the National Flood Insurance program. The law also includes a note in the disclosure that “properties in coastal and riverine areas may be subject to increased risk of flooding over time due to projected sea level rise and increased extreme storms caused by climate change which may not be reflected in current flood insurance rate maps.”
- New York passed a disclosure law for renters in 2022 (Senate Bill 5472) and the equivalent for home buyers in 2023 (A1967), which calls for disclosures including property flood damage history, location of the structure in the 100- or 500-year floodplain and elevation certificate availability.
- Texas: In 2019, Texas enacted House Bill 3815 and Senate Bill 339 requiring sellers to disclose any previous water damage and flooding, floodplain status, previous claims filed or assistance from FEMA or the Small Business Administration for flood damages and whether the property had flood insurance.
State Policy Considerations:
- Evaluate available data on state level risk factors.
- Explore types of disclosures and their relation to insurance policy uptake.
- Understand that risks may change over time, so disclosure policies would need to adapt.
Using Research and Data
Evaluating risk requires access to good data. Over the last several years, the federal government and states have invested in data collection, analysis and management and have integrated data into their decision making. For example, having access to high-resolution topographic data can help decision makers understand the vulnerabilities of shorelines to coastal changes, aid in watershed planning and illustrate potential hot-spots in wildland-urban interfaces.
Universities, often in partnership with states, have stepped up their research efforts and become an important source of data. Federal agencies such as the National Oceanic and Atmospheric Administration (NOAA) provide comprehensive tools and resources to assist states, territories, tribes and localities. Additionally, some states have established stand-alone entities to provide research, data and analysis to help all levels of government make informed decisions. The following are a few examples:
The Iowa Flood Center was established by the legislature in response to record-setting flooding in 2008 that devastated the eastern part of the state. House File 822 (2009) provided funding to the state board of regents to establish and administer a flood center at the University of Iowa College of Engineering. The law requires the center to work cooperatively with state and federal agencies on flood-related projects that help residents understand their flood risk and better prepare for flooding. Among their many projects are a cost-efficient sensor network to better monitor stream flow, a library of flood-inundation maps for more than 30 communities, and floodplain maps for all 99 counties.
The Florida Flood Hub for Applied Research and Innovation was created in 2021 through House Bill 7019 and is based at the University of South Florida College of Marine Science. Working in concert with the Resilient Florida Program, the Flood Hub supports statewide efforts to protect people, businesses, natural resources and infrastructure. Their open-source products and services inform vulnerability assessments, risk analyses, economic investments and strategies to help communities mitigate and adapt to flood-related hazards. The Flood Hub is currently supporting two technical workgroups on sea level rise and rainfall.
Virginia is also using the university system for research and education related to climate resilience. These include the Virginia Coastal Resilience Collaborative (formerly Virginia Coastal Policy Center), Virginia Sea Grant, Commonwealth Center for Recurrent Flooding Resiliency, the Institute for Coastal Adaptation and Resilience, and the Virginia Institute of Marine Science.
State Policy Considerations:
- Explore the capabilities of higher education institutions to produce data and research specific to state needs.
- Leverage federal funding available for research support and/or consider state level appropriations.
- Evaluate opportunities for regulatory and research collaboration.
Using Building Codes
In an era of increasingly severe disasters, states can use building codes to shore up the built environment making it more resilient to the impacts of severe weather events. In the wake of recent disasters, states have added requirements for everything from fire-resistant building materials to hurricane straps to their building codes, illustrating how the codes are a powerful tool in the policy toolbox to dramatically improve the ability of infrastructures to withstand disaster and save lives.
There are several different model building codes, but most states have adopted or use the International Building Code (IBC) as their model code. The IBC can be adopted as is or used as a baseline and customized by the state or jurisdiction. Additionally, organizations such as the American Society of Civil Engineers offer technical standards related to structural design such as building load which can be impacted by snow, rain, high wind and seismic activity. These technical standards are often reflected in model code.
Model codes give states and local jurisdictions the flexibility to focus on specific hazards such as wildfires or floods which are common to their region. As a result, building codes vary from state to state and between jurisdictions. Some states such as North Carolina, Iowa and Louisiana have adopted a statewide building code, while others such as Maryland have a statewide code but offer local jurisdictions the option to add amendments. Other states, such as Delaware and Wyoming have no statewide code, leaving it entirely up to local jurisdictions. Only a handful of states have adopted the most recent (2021) version of the IBC code and in fact, many states are operating under codes dating back several years.
As states and local jurisdictions explore model codes, two key considerations may rise to the top of the list: cost/benefit and enforceability. Often, provisions required by building codes, such as the addition of sprinkler systems or a metal roof, can add to building costs and may become a barrier to compliance if the financial burden on homeowners or builders is too great. As such, states may limit or omit certain requirements, as long as minimum code requirements are met, but must weigh whether these omissions will compromise the effectiveness of the code in the long term. States have also taken steps to incentivize certain building code requirements. A good example is tornado shelters, often known as safe rooms, which are incentivized in several southern and midwestern states allowing homeowners to build them at low or no-cost. Additionally, many states and local jurisdictions grapple with code enforcement. A lack of enforcement can render even the most stringent code ineffective and can compromise public health and safety. Typically, the lack of resources to support activities such as permitting and inspection results in lax enforcement and can compromise the integrity of the codes.
Several states have updated their building code requirements following a disaster. Following a significant wildfire season in 2017, Washington enacted Senate Bill 6109 in 2018 to adopt portions of the International Wildland Urban Interface Code into the state building code. In 2022, Florida enacted Senate Bill 4D to clarify that roof repair or replacement can take into account compliance with editions of the Florida Building Code dated 2007 or later. Structures that have integrated the new code requirements have weathered subsequent storms much better than other structures which may not meet a more recent code. This was evidenced in Florida after Hurricane Michael made landfall causing an estimated $25 billion in damage to homes and infrastructure.
State Policy Considerations:
- Consider legislation to adopt the most recent building code now and in the future.
- Require all state buildings to comply with the latest building codes and require that state-funded projects do the same.
- Offer subsidies or tax credits to promote adoption of building code provisions and incentivize homeowners and building owners to retrofit properties to meet the current standards.
- Establish funding mechanisms to support the implementation of upgraded building codes, especially where private or public insurance does not cover the full cost and in disadvantaged communities.
- Ensure that state and local jurisdictions have the staffing and support they need to conduct site inspections, issue and approve permits and act in the event of non-compliance.
- Establish or strengthen licensure, certifications and continuing education requirements for building code inspectors. This ensures a pipeline of properly credentialed individuals to keep up with new construction needs as well as retrofits.
As state legislatures continue to explore ways to minimize the impacts of disasters, adopting the latest building codes, whether at a statewide level or by jurisdiction, should be given consideration. Adoption can impact not only the infrastructure, but the state and jurisdictional ability to apply for and secure federal funding. Demonstrating investments in mitigation makes states more competitive for federal grant opportunities such as FEMA’s Building Resilient Infrastructure and Communities (BRIC) program, reduces residents’ insurance premiums through the NFIP Community Rating System and the Building Codes Effectiveness Grading Schedule, and potentially eases recovery with post-disaster Public Assistance funding.
Building Code Benefits
Choosing to forego adoption of building codes, or weaken the elements of building code standards, can impact states and their residents. For example, FEMA's Public Assistance program generally requires that hazard resistant provisions of the International Code Council's International Building Code, the International Existing Building Code, and/or the International Residential Code be used as a minimum design standard for all eligible building restoration projects. Failure to incorporate these minimum standards may result in denial or de-obligation of FEMA funding. Additionally, communities participating in the National Flood Insurance Program (NFIP) must meet minimum floodplain management standards. Insurers may also decline coverage in areas where building code standards are determined to be inadequate given the risks such as wildfires or flooding. There are also economic considerations. If infrastructure is badly damaged as the result of a severe storm or disaster, it will take longer to rebuild and restore the community.
Local Land Use Planning
How and where growth occurs can have a major impact on the ability of communities to prepare for and recover from natural disasters. States delegate to local governments the responsibility to develop and implement land use planning documents and zoning regulations. Comprehensive plans, also known as general plans or master plans, are the foundation for local land use planning and serve as a blueprint for the growth and development of a community over time. In most cases, a comprehensive plan consists of diagrams or maps illustrating the location of existing land uses, as well as written text outlining development goals for a range of uses such as housing, transportation, utilities and recreation. While planning occurs at the local level, states play a role in directing the planning process. Most states require local governments to complete a comprehensive plan, although some are more prescriptive than others regarding its content.
South Carolina Senate Bill 259, enacted in 2020, requires local comprehensive plans to include a resiliency element that considers the impacts of flooding, high water and natural hazards on individuals, communities, businesses, economic development and infrastructure. The element promotes resilient planning, design and development, and is coordinated with neighboring jurisdictions and agencies.
In 2021, the New Jersey Legislature passed Senate Bill 2607, requiring all land use elements of a municipal master plan adopted or amended from then on to include a climate change-related hazard vulnerability assessment. The assessment would, among other things, evaluate current and future threats to, and vulnerabilities of, the municipality associated with natural hazards, include a build-out analysis of all future development, and provide strategies and design standards that may be implemented to reduce or avoid certain risks.
Washington state lawmakers updated the state’s Growth Management Act in 2023. House Bill 1181 directs cities and counties to consider climate change and resiliency in their comprehensive planning. Plans must address natural hazards, including sea level rise, landslides, flooding, drought, heat, smoke and wildfire, and outline efforts to enhance the ability of communities to adapt to changes consistent with the principles of environmental justice. Local jurisdictions may adopt by reference a FEMA natural hazard mitigation plan or similar plan to satisfy the new requirements.
State Policy Considerations:
- Evaluate the state’s role in land use planning relevant to risk factors.
- Determine if hazard mapping tools and data can be used to determine risk at the local level.
- Assess the value of creating state level hazard zoning that can support lower risk development. For example, New Jersey authorizes the Department of Environmental Protection to delineate and mark flood hazard areas and enforce an inland flood protection rule.
Enhanced hazard mitigation planning
FEMA’s Hazard Mitigation Grant Program (HMGP) provides funding for states to rebuild in a way that reduces or mitigates future natural disaster losses in their communities. The formula generally gives 15% of the total federal assistance amount provided for recovery from the presidentially declared disaster. Another policy HYPERLINK "https://www.fema.gov/sites/default/files/documents/fema_state-mitigation-planning-policy-guide_042022.pdf"option available to states is developing enhanced hazard mitigation plans. This supplemental planning increases the HMGP assistance eligibility to 20%. The critical difference that sets enhanced planning apart is a more comprehensive approach that takes into account risk reduction across programs and takes a long view on mitigation planning. FEMA assesses several factors for eligibility, including conformance to standard plan benchmarks, grants management performance, community-wide integrated planning, commitment to comprehensive mitigation programming, effectiveness of current mitigation plans, and ability to implement plans. States should allow for at least 12 months to be approved for enhanced status. Fifteen states are currently eligible for the benefits of enhanced mitigation planning. Additional information and details can be found on FEMA’s website.
Buyouts & Relocation
Communities highly vulnerable to disasters are starting to address the need to relocate residents and assets. Long-term resilience will include the need to plan and make strategic investments in both receding and receiving communities.
State programs for buyouts and relocation are being developed to complement other local and federal programs. For individual households, navigating the complex process of buyouts can be overwhelming, costly and burdensome. Examples include the Blue Acres program in New Jersey and ReBuild in North Carolina. In 1995, New Jersey's Department of Environmental Protection created the Blue Acres program, designed to relocate families whose homes are at risk of flooding and to convert these lands to open space. The program has two primary aims: to provide funding post-disaster to assist flood-damaged homes and to proactively acquire land that has been damaged in the past or to acquire land that is prone to future damages and to protect adjacent communities. Following two consecutive years of intense tropical weather, North Carolina established the Office of Recovery and Resiliency (NCORR) to create dedicated resilience programs, including ReBuild. NCORR programs aim to strengthen homeowner recovery, strategic buyouts and community development and emphasize the importance of layering state and federal funding to achieve these goals.
State programs like Blue Acres and ReBuild are unique because they do not rely on federal funding. Rather, they are created to address gaps in federal programs. Other state agencies are administering significant federal funding. For example, the Texas General Land Office was allocated more than $14 billion for recovery and mitigation, including both Community Development Block Grant Disaster Recovery (CDBG-DR) and Mitigation (CDBG-MIT) funds from the U.S. Department of Housing and Urban Development (HUD). Likewise, Louisiana is distributing CDBG-MIT funds for use as buyouts in seven regions of the state through the Office of Community Development and the Louisiana Watershed Initiative.
Currently, relocation is occurring through ad-hoc movements that can strain the resources of receiving communities while reducing the resources of receding communities, often due to loss of tax base. There is increasing attention on intentional planning around relocation and managed retreat which can better identify and prepare safe receiving communities for potential rapid population growth, while also properly managing the disinvestment in receding communities.
State Policy Considerations:
- Assess communities at risk of broad hazard impact.
- Evaluate capacity of lower risk communities to receive relocated residents and assets.
- Curate funding options to execute risk-based planning and relocation needs.
- Use scenario planning data and tools to help determine future risk.
Several states facing escalating damages from climate extremes are now experiencing stress in their property insurance markets, including Florida, Louisiana, Texas, and the wildfire-prone regions of California. In Florida and Louisiana, recent storms have pushed dozens of insurers into bankruptcy. In many high-risk areas, insurers and reinsurers are exiting the market or restricting coverage. These trends are exacerbated by the growing costs of rebuilding from inflation, supply chain disruptions and legal challenges that are raising costs in certain states. As private insurers pull back from these markets, the role of state-run insurance programs like California’s FAIR plan or Florida’s Citizens Insurance will continue to increase. Bolstering state insurance programs like these can be helpful, as they provide an important backstop for households (although often at higher prices or lower coverage levels), and also provide some degree of insulation to local housing and mortgage markets from growing climate risk. Yet public sector markets also grapple with the same difficult economics of insuring a catastrophic risk that is only getting worse. A 2023 report by Ceres examines the role of insurance in disaster recovery.
To protect households facing loss of coverage, states can consider providing means-tested assistance or pass legislation that enables insurance regulators to accept new insurance designs, such as parametric and community insurance. Ultimately, stabilizing the disaster insurance market to lower the underlying risk of losses may be best achieved by household and community-level resilience measures and exploring options to support relocation.
While both insurers and those purchasing insurance look for ways to reduce costs, there does not seem to be a direct relationship between resilience investments and premium reductions. Most state risk mitigation programs do not have the authority to ensure that insurers actually account for and pass on loss reduction savings to policyholders, and insurers do not necessarily have an incentive to reduce insurance prices. As state policymakers and regulators weigh their options for trying to reduce insurance costs, they may consider imposing requirements on insurers to provide consumer mitigation rebates, or create the incentives directly within state public insurance programs. For example, the North Carolina state wind pool’s FORTIFIED roof program offers grants, insurance discounts and endorsements to support roof strengthening. The endorsement option allows those unable to upgrade to a fortified roof a policy supplement that pays additional funds to upgrade following a covered loss.
Insurance incentives for community-level resilience investments is even more challenging. While theoretically promising, the viability of reducing insurance costs and incentivizing risk reduction relies on insurers having catastrophe modeling that takes into account community adaptation measures. Due to the proprietary nature of insurers’ models, it is unclear how resilience investments get counted in pricing models, especially for green or natural infrastructure. Because of this, it is much easier to establish these incentives within public insurance programs, like the Community Rating System within NFIP, as the loss models are part of the administrative domain. Despite the potential premium reduction benefits, municipal participation in CRS is quite low; states could invest in technical and administrative CRS support to help cities and households access those savings and improve their scoring.
The state of California recently adopted the “Safer from Wildfires” framework, identifying 10 actions households can take that materially reduce their wildfire risk. The California Department of Insurance has also instituted the nation’s first wildfire safety regulation, requiring that insurers provide discounts to consumers if they follow the wildfire risk reduction actions, and instituting a higher level of transparency on insurer’s risk ratings.
State Policy Considerations:
- May consider state insurance systems.
- Evaluate risk reduction incentives into state insurance
- Work with insurers to provide risk reduction incentives
- Enable participation in Community Rating System
In general terms, bonds are a debt security that pays a predetermined rate of interest during a set amount of time until the maturation date. Municipal bonds are issued by state or local governments to fund general budget obligations and finance big capital or infrastructure projects, paid back through a government’s taxing power (general obligation bonds), or revenues from the capital project such as stormwater fees (revenue bond). Municipal green bonds are specifically designed to finance projects with environmental benefits. While there is no universal definition for what those benefits entail, there are two main frameworks that facilitate some standardization: the Climate Bond Standard and Certification, managed by the Climate Bonds Initiative (CBI) which assesses bonds on their performance lowering greenhouse gas emissions, and the Green Bond Principles from International Capital Markets Association, which are voluntary guidelines for the process, transparency and disclosure of green bonds. Green bonds function as any other municipal bond, aside from having an earmarked purpose for environmental outcomes that follow these standards and principles. Labeling bonds a green or climate bond through a recognized framework can benefit the issuer by making it eligible for certain Environmental, Social and Governance (ESG) funds, but there is a cost associated with third party certification; as a result, regular municipal bonds may meet environmental outcomes without being labeled as such.
Environmental Impact Bonds (EIBs) or Social Impact Bonds are a newer iteration of a green bond and structured slightly differently. Repayment is based on the actual performance of the environmental or social investment, as measured by indicators set at the bond design, and paid by the beneficiaries of the project through avoided costs (i.e. regulatory fines) or other co-benefits. EIBs are useful for interventions perceived as risky or have greater uncertainty around performance, such as natural infrastructure. Payments to investors are reduced if it underperforms and increased if it overperforms, allowing cities to pilot new interventions by sharing the risk with investors.
While bonds can be used for any type of infrastructure, municipal bonds specifically labeled for resilience investments are not common. To date, the green bond market has largely focused on carbon mitigation and water quality, and green bonds application in resilience is low: adaptation-related investments are estimated to be less than 4% of the green bonds issued in 2022. However, this is difficult to measure since the green bond performance categories have historically not included resilience. In response to this gap, Climate Bonds Initiative (CBI) is starting the process of updating Climate Bond standards to establish science-based rules as to what constitutes sound adaptation investments within green bonds markets.
Resilience bonds are another option to finance the big investments in resilience infrastructure. They are modeled after and built off of catastrophe bonds, which function more like insurance for local governments than municipal bonds. With catastrophe bonds, local governments pay premiums to a bond issuer in exchange for a payout if a catastrophe above a certain threshold occurs, based on the cost of damage. A resilience bond would build off an existing catastrophe bond, enabling a local government to model the expected reduction in damage if resilient infrastructure projects were built and establish a rebate to the local governments that can be used to finance projects or reduce insurance payments. While resilience bonds use cases have been modeled based on existing catastrophe bond programs, the field is quite nascent and few states or cities have implemented them.
The New York State Environmental Bond Act authorized the issuance of $4.2 billion in bonds for mitigation, adaptation and environmental quality. $1.1 billion was allocated specifically for flood risk. The law is structured as a traditional municipal bond, with general obligation (repayment through taxes). Priority projects are being worked out with the first bonds expected in FY 2023.
State Policy Considerations:
- States can issue municipal bonds to finance resilience infrastructure. Local laws vary, but many states require voter approval for the state to pass more debt.
- Identify target resilience projects and assess potential benefits.
- States can issue municipal funds for specific resilience purposes to reserve funding as matching funds for big federal spending bills, such as the Inflation Reduction Act and bipartisan Infrastructure Act.
Green banks are generally mission-driven public or non-profit institutions with the goal of financing carbon mitigation and clean energy projects. While there is not a single official designation of a green bank, the institutions represented in the American Green Bank Consortium share a common goal of expanding investments in innovative clean energy projects. Because their purpose is climate investment rather than profit maximization, green banks are able to offer subsidized loans or make riskier investments to target investments towards underserved populations and emerging climate investments. While their initial capital or base funding streams usually comes from public or philanthropic sources (bonds, federal grants, utility fees), green banks often use financing techniques for projects that makes projects less risky and more attractive to private capital, such as loan guarantees and gap financing. Estimates show that in 2022, public capital from green banks catalyzed over two times the amount in private capital. Establishing green banks can be critical for states wanting to access new federal funding, as much of the IRA funding is limited to non-profit entities, aimed at distributing funds through state and local green banks for climate projects.
Infrastructure banks have a similar structure, with a broader mandate: typically public sector entities (state, county) which provide and attract loans for municipalities or special authority to invest in infrastructure projects. While not necessarily focused on mitigation, infrastructure banks are meant to provide low-interest loans and technical assistance, especially for larger and more complex projects that municipalities may not be able to manage independently. These structures have long been deployed at the state level through Department of Transportation state infrastructure banks, aimed specifically to help finance surface transportation projects by making it easier to leverage federal funds or borrow on the bond market.
Adaptation and resilience has not historically been a stated mission of green banks or infrastructure banks, but resilience can be prioritized in either vehicle. Priorities are set by the government institution that creates the bank, and resilience and risk reduction goals can easily be integrated as part of the stated mission, as Vermont did in 2023 in passing its Vermont Climate Infrastructure Fund (HB 248). Over the last few years, several long-standing green banks and community development financial institutions including Connecticut Green Bank and Finance New Orleans, explicitly updated their funding strategy to include resilience goals into their project priorities.
The Rhode Island Infrastructure Bank serves a mission to support innovative financing for infrastructure projects, representing both infrastructure bank and green bank structure. The bank was first established in 1989 to finance clean water infrastructure, but was expanded in 2015 to include clean energy, energy efficiency and brownfield remediation. This demonstrates how states can build off of existing special purpose institutions to build a broader resilience financing system. The bank’s municipal resilience program provides training and data to cities on vulnerabilities, assisting them in developing and prioritizing projects to build resilience and providing grants for their identified projects. The bank also manages a stormwater project accelerator, which provides the upfront capital (interest-free) for green stormwater infrastructure projects that will be paid back through public reimbursement grants.
State Policy Considerations:
- Explore establishment of a green bank which may require legislative authorization.
- Green banks require upfront capital or a dedicated source of funding. States can aid the development by helping create a funding source through federal grants, bonds, utility surcharges, carbon market revenue, legal settlements and more.
State Policy Landscape
States have considered hundreds of bills related to disaster mitigation since 2018 relating to infrastructure planning to reduce risks, implementing financing mechanisms to streamline preparedness and response, green infrastructure initiatives to protect and fortify natural resources, and the development of resilience offices to support disaster planning and recovery across government.
Examples of recently enacted legislation include:
- Nebraska Legislative Bill 348 (2019)—Updates the state’s building code standards to reflect most elements of the 2018 editions of the International Building Code, International Existing Building Code, and International Residential Code.
- New Hampshire House Bill 562 (2019)—Updates the state’s building code standards to reflect the 2015 editions of the International Building Code and International Existing Building Code.
- Oklahoma House Bill 3819 (2022)—Creates a Disaster Mitigation and Recovery Matching Fund to support rural mitigation, outline qualifying hazards and structure administration of funds.
- Washington House Bill 1728 (2023)—Creates a statewide resiliency program to coordinate stakeholders and recommend mitigation projects.
- Florida House Bill 7053 (2022)—Establishes the Statewide Office of Resilience and requires a report on flood resilience and mitigation efforts.
- Florida House Bill 111 (2023)—Requires all publicly funded projects conduct a Sea-Level Impact Projection (SLIP) study and evaluate alternatives.
- New York Senate Bill 7582 (2022)—Requires assessment of current and the recommendation for future building codes in relation to mitigating flood damage.
- North Dakota House Bill 1098 (2023)—Precludes the disbursement of state flood disaster assistance funds to communities that fail to adopt or enforce floodplain management ordinances.
- Virginia Senate Bill 551 (2022)—Implements recommendations from the Coastal Resilience Master Plan, requiring updates every five years, and tasks the Department of Conservation and Recreation with developing a statewide Flood Protection Master Plan.
- California Senate Bill 70 (2019)—Requires each electrical corporation's wildfire mitigation plan to include a description of where and how the corporation considered undergrounding electrical distribution lines within service territories identified to have the highest wildfire risk in a Commission fire threat map.
- Colorado House Bill 1011 (2022)—Establishes a state grant program that provides funding to local governments that dedicate resources for wildfire mitigation purposes.
- Utah House Bill 261 (2023)—Creates the Wildland-urban Interface Prevention, Preparedness, and Mitigation Fund to cover associated costs within the state and provide for fire department assistance grants.
Heat & Drought
- California Assembly Bill 2238 (2022)—Directs the development of a statewide extreme heat ranking system.
- Oklahoma House Bill 2293 (2023)—Creates the Oklahoma Flood and Drought Management Task Force, which is to develop and recommend state drought and flood response, recovery, and mitigation initiatives.
- Washington House Bill 1138 (2023)—Provides for grants for eligible public entities to reduce current or future hardship caused by water unavailability stemming from drought conditions.
- Florida House Bill 881 (2023)—Expands accessibility to hurricane mitigation grants under the My Safe Florida Home Program.
- South Carolina Senate Bill 500 (2023)—Amends the hurricane damage mitigation program by establishing grant criteria, clarifying availability of matching funds for local governments, and removes certain grant caps.
- Utah House Bill 532 (2023)—Modifies construction and fire codes, to include certain seismic provisions.
- Washington Senate Bill 5933 (2022)—Creates the school seismic safety grant program to help school districts and state-tribal education compact schools cover the cost of retrofitting or relocating school facilities located in high seismic areas or tsunami zones.