Global Economy Briefs

In an Age of Billion-Dollar Disasters, FEMA Could Weaken

February 25, 2025

The White House issued an executive order establishing a Council to Assess the Federal Emergency Management Agency (FEMA) in the form of a 20-member committee, co-chaired by the Homeland Security and Defense secretaries, to recommend “improvements and structural change.” This comes at a time when FEMA’s necessity has been questioned by the Administration, which has suggested pushing responsibilities down to state and local governments would be more effective.

Emergency management is largely managed locally: However, the majority of disasters in the US do not make it to FEMA’s purview. Emergency management in the US functions under a structure that calls for disaster preparedness, response, and recovery to be handled at a local level, then supported by the state government.

The federal government becomes involved in only truly overwhelming cases—most often for “billion-dollar disasters”. FEMA’s involvement in a disaster is the result of a state’s governor submitting a declaration that the President has approved.

Billion-dollar disasters are on the rise: In 2024, there were 27 individual weather and climate disasters with at least $1 billion in damages, trailing only 2023’s record-setting 28 events. The cost was approximately $182.7 billion. This places 2024 as the fourth costliest on record, trailing 2017 ($395.9 billion), 2005 ($268.5 billion) and 2022 ($183.6 billion).

The TCB take: There is considerable concern that the benefits of a robust federal-level emergency management function, with a cadre of workers that can be deployed nationwide, could not easily be replicated at the state level—regardless of how funds are distributed. The dismantling and cutting of emergency management capabilities at the federal level could compromise businesses and communities’ ability to recover from, and plan for, disasters.

Businesses should engage their local governments and communities in creating resilient operations and business continuity plans that take into consideration varying levels of public support.