"Among the many impacts of Katrina, one is especially relevant to this essay. In effect, by the nature and magnitude of its response, the federal government post-Katrina resolved a debate that simmered among policy makers and academic scholars during the 1990s: whether the federal government should provide some kind of backstop insurance to the private market for large disasters. Clearly, the answer to that question after Katrina, is 'yes', although the post-Katrina "backstop" is informal and ad hoc. This essay will argue that this ad hoc or de facto insurance system is also inefficient because it provides inadequate incentives for loss prevention and unfair because those most at risk from future catastrophes do not bear a disproportionate amount of the costs to repair and rebuild, as they should." Source: The Brookings Institution
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