OMB Standards and Finance to Support Community Resilience

The White House has been coordinating efforts in partnership with insurance and finance leaders on strategic objectives to increase community resilience and insurability since 2014. From the White House Office of Management and Budget, Standards and Finance to Support Community Resilience is designed to identify opportunities for continued collaboration and help ensure that “future investments will be climate smart from the start, that damaged communities build back smarter, and that both public and private sectors are poised to seize new opportunities to achieve resilience.”

The report opens by identifying the value of making investments in resilience. Along with rebuilding smarter and stronger after a natural disaster, public and private sectors are encouraged to invest in resilience now. Details are given on how resilience investments: Reduce Disaster Costs, Strengthen Insurability and Market Performance, and Mitigate Credit Downgrades. The credit downgrades section looks at managing credit ratings for traditional municipal bonds by factoring community resilience into development. 

[Over the past two years, major credit rating agencies released reports on the emerging risks associated with climate change, warning that financial institutions should prepare for the “multilayered and significant impacts” of climate change. Given that municipal bonds are one of local government’s primary means of securing project funding, it is important for community resilience to factor more directly into municipal credit rating, both to drive state and local action to achieve long-term resilience with less dependence on Federal funds and to assure transparency and protect investor interests.]

The 'Retrofit for Resilience through Savings-Based Finance' section discusses a few ways (some with Federal support) in which innovative resilience finance can be structured including:

  • Property-Assessed Clean Energy (PACE)
  • Energy Savings Performance Contracting
  • The Department of Energy Loan Program Office’s 2015 Title XVII Supplement
  • Water Infrastructure Resilience
  • Small Business Administration (SBA) Disaster Loans to Support Businesses and Homes
  • SBA additional support for resilient rebuilding

The 'Enabling and Accelerating Resilience' section of the report describes mechanisms for providing incentives to encourage resilience such as:

  • Advances in Data Collection and Assessment;
  • Mechanisms for Incentivizing Resilience;
  • State, Local, and Private Sector Innovation; and
  • Tax Incentives for Resilience

Gaps in current infrastructure governance are described - including gaps in land use resiliency decisions, building code adoption, weaknesses in the enforcement of codes and lack of effective governance and regulation of buildings - which can all result in construction of buildings that are less resilient. The report explains that the primary governance of buildings is generally administered at the state and local levels through land use and zoning requirements and building codes. The Federal government can nonetheless influence what is built and how, when Federal land, money, or programs are involved in the building, substantial rehabilitation or rebuilding of structures and homes after a disaster.

“Despite significant U.S. investments in preparedness and resilience, extreme-weather-related losses and costs in lives, property and natural resources continue to mount,” the report states. “Risk models indicate that the annual likelihood of severe weather causing at least $1 billion in insured losses in the U.S. is 92%, or almost certain to occur every year.”



Publication Date: December 21, 2016


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