SCC-CIVIC-PG Track B: Improving the Post-Flood Financial Resiliency of Low- and Moderate-Income Households

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This project addresses resiliency to natural disasters from a perspective that is frequently not researched but one that has major human impact - financial resilience. Prior research has found that low income households suffer disproportionately from disasters and recover less quickly than other residents. Financial resilience—the ability to recover from an economic shock—underpins other aspects of recovery and is a necessary condition for broader urban disaster resilience. Despite this, it is an under-investigated aspect of climate adaptation. While the problem has been identified, actionable research into solutions is scarce. The proposed project is designed to fill this gap. This project's specific objective is to demonstrate that increasing the financial resilience of low and moderate income (LMI) households (both homeowners and renters) in New York City presents an essential element of resilience strategies especially in response to increasing urban flooding risk. This project, across both phases, will be comprised of three inter-related research components: (1) designing a pilot policy intervention; (2) improving disaster financial literacy among households and capacity among city staff; and (3) developing a metric of financial resilience to disasters, especially for LMI households. The work will be a joint effort between the Wharton Risk Center at the University of Pennsylvania, the New York City Mayor’s Office of Resiliency, and the Center for NYC Neighborhoods, as well as other partner researchers. The work will be informed by an advisory board with deep expertise on this challenge. The pilot program will be a public-private partnership to demonstrate the importance of financial resiliency as a complement to other more typically researched approaches - since LMI households tend to have insufficient savings, can be locked out of credit, cannot afford standard insurance, and suffer disproportionately more longer term damage. Phase 1 of this project will be a period of stakeholder engagement, involving scoring policies against chosen criteria, to identify the most promising solution for piloting in Phase II: (1) parametric microinsurance, (2) premium reductions for low-cost flood mitigation, (3) a local flood insurance affordability program, (4) community assistance plus a high-deductible NFIP policy, (5) right-sizing insurance coverage, and (6) community-based insurance. The second project component will be developing disaster financial literacy tools and building expertise on this topic among civic partner organizations through specific products and engagement strategies. Prior work has found that increasing financial literacy makes individuals better able to withstand shocks. The third component will develop a metric of financial resilience to disasters for LMI households. This metric will be designed to inform the broader academic literature, which lacks an established approach to measurement of this specific concept, as well as be practically useful to city programs. Constructing the metric will draw on city data, as well as a survey of LMI households. This project is in response to Track B - CIVIC Innovation Challenge - Resilience to Natural Disasters a collaboration with NSF and the Department of Homeland Security.This award reflects NSF's statutory mission and has been deemed worthy of support through evaluation using the Foundation's intellectual merit and broader impacts review criteria.