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American Focus > Blog > Environment > A look at the growing ‘disaster economy’ turning crisis into cash
Environment

A look at the growing ‘disaster economy’ turning crisis into cash

Last updated: August 12, 2025 10:55 am
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A look at the growing ‘disaster economy’ turning crisis into cash
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The devastating floods that hit the Texas Hill Country in early July left a trail of destruction in their wake, with thousands of homes damaged or destroyed. The sight of a fully intact house floating down the swollen Guadalupe River shocked onlookers, only to be crushed against a bridge moments later. The tragedy in Texas is just one example of the growing toll of natural disasters on the United States.

As climate change continues to fuel more severe hurricanes, wildfires, floods, and droughts, the economic cost of responding to and recovering from these disasters is skyrocketing. The federal government has spent over $1 trillion on disaster relief this decade, with the cost only expected to rise in the coming years.

One clear indicator of this rising cost is the increasing number of federal disaster declarations per year. Since the 1960s, the Federal Emergency Management Agency (FEMA) has had to handle a 150 percent increase in major disaster declarations annually, as disasters become more intense and widespread.

FEMA’s spending on disaster relief has surged in recent years, averaging $12 billion over the past 30 years. The agency’s Disaster Relief Fund, which funds disaster response operations, has seen annual spending increase from $3.4 billion to $16 billion as disasters grow in size and impact.

The cost of rebuilding after disasters is also increasing, with the price of constructing a new home nearly doubling since 1996. Rising building costs make it harder for families to recover after a disaster, as they struggle to afford rebuilding their homes.

Home insurance premiums have also risen significantly, with a 30 percent increase since 2020. Areas at high risk for natural disasters, such as coastal regions and tornado-prone areas, have seen the highest premium increases, putting a financial strain on homeowners in these areas.

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Despite the increasing frequency and severity of disasters, more Americans are choosing to move into disaster-prone areas. In 2023, thousands of people moved into counties at high risk for wildfires and floods, drawn by lower taxes and affordable housing options.

As the cost of natural disasters continues to rise, it is clear that urgent action is needed to address the root causes of climate change and mitigate its impacts. Without bold and decisive measures to combat climate change, the toll of natural disasters on lives and livelihoods will only continue to grow. The recent trend of people leaving low-risk areas in the United States has raised concerns about disaster preparedness and resilience. According to recent data, approximately 38,000 individuals have left the country’s low-fire-risk counties, while nearly 7,000 people have departed from low-flood-risk counties. This movement of people away from areas traditionally considered safe from natural disasters has sparked a conversation about the importance of being prepared for unforeseen events.

The federal government has long emphasized the importance of investing in disaster preparedness as a way to mitigate the impact of disasters and save money in the long run. For every dollar spent on preparing for a disaster before it strikes, it is estimated that $6 can be saved in response and recovery costs. However, the current administration has taken a different approach, cutting funding for disaster resilience initiatives and weakening the Federal Emergency Management Agency (FEMA)’s ability to assist states in preparing for and responding to disasters.

Since April, the Trump administration has slashed $750 million in new resilience funding and clawed back nearly $900 million in grant funding that had been promised to states for various improvements such as upgrading stormwater systems and building flood-control systems. Additionally, about 10 percent of FEMA’s staff has been let go, fired, or placed on leave, with the agency potentially facing a loss of up to 30 percent of its workforce by the end of the year.

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The consequences of these cuts and layoffs are significant, particularly for communities that are most vulnerable to climate-driven extreme weather events. Without adequate funding and support from FEMA, these communities may struggle to recover from disasters and build resilience for the future. While millions of people are at risk of losing access to crucial disaster response resources, there are others who may benefit from the current administration’s policies.

Victoria Salinas, a former leader of FEMA’s resilience initiatives under the previous administration, pointed out that disaster response can be profitable for certain parties. Just as war can be profitable for some, the business of disaster response may also present opportunities for financial gain. This raises questions about the motivations behind the administration’s cuts to disaster preparedness funding and the potential consequences for those who rely on FEMA’s support during times of crisis.

In conclusion, the recent trend of people leaving low-risk areas highlights the importance of investing in disaster preparedness and resilience. As the climate continues to change and extreme weather events become more frequent, it is crucial for the government to prioritize funding for programs that help communities prepare for and respond to disasters. By cutting funding for these initiatives, the current administration may be putting millions of people at risk while potentially benefiting others. It is essential to prioritize the safety and well-being of all communities, especially those most vulnerable to the impacts of natural disasters.

TAGGED:cashcrisisDisasterEconomygrowingTurning
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