In 2024, we wrote an article titled “Adaptation Through Shock,” which argued that disasters could be more than moments of collective trauma—they could create the impetus to move communities toward adaptation that’s urgently needed as the climate gets more extreme each year. Our argument rested on the existence of large amounts of federal funding for disaster recovery in the United States. In 2025, under the second administration of President Donald Trump, that changed: Federal money started to dry up and became much less reliable, in an unpredictable and politicized policymaking approach we call “chaotic austerity.” In this article, we reexamine possibilities for adaptation in the wake of disasters, in an era defined by chaotic austerity in policymaking and a shrinking role for the federal government in managing emergencies and disasters. 

During the twenty-year period that started with Hurricane Katrina in 2005 and ended with the beginning of the second Trump administration in early 2025, the federal government in the United States developed a policy of relative generosity toward jurisdictions where catastrophic events happened. Not every person who lived through a disaster experienced generosity from the federal government—inequity, inefficiency, and a lack of focus on future resilience were major challenges in the pre-2025 policy architecture—but more than $300 billion for various kinds of disaster recovery flowed to state, local, tribal, and territorial governments from the Federal Emergency Management Agency (FEMA), the Department of Housing and Urban Development, and the Small Business Administration (see figure 1). Major disasters struck from the Gulf Coast to California, Colorado, New York, and New Jersey. The broad impact of disasters across the political spectrum helped to keep the dollars flowing and to avoid the naked politicization of federal disaster aid.

Two years ago, we argued that these extraordinary resources could be accelerants for positive adaptation—essentially, that Naomi Klein’s shock doctrine could be turned on its head in an economy and society stressed by rapid climate change and hungry for solutions. Writing about major geopolitical events throughout the twentieth century, Klein argued that disastrous free-market economic policies were deliberately imposed on countries in the aftermath of crises when populations were too disoriented to resist. We argued that, when resources were freely flowing to disaster-impacted regions of the United States, communities could use that money to rebuild with greater focus on the resilience of the people who were being forced to adapt.

But in 2026, the climate is changing at an ever-increasing rate. The last three years have seen a greater increase in the rate of global warming than any other period in the past three decades. In the face of an increasingly volatile and disaster-prone climate, the United States’ chaotic austerity approach to disaster recovery means there are fewer federal resources, and those resources that are available are less predictable and take longer to arrive in local communities than they did in the era immediately after Hurricane Katrina.

In the face of an increasingly volatile and disaster-prone climate, the United States’ chaotic austerity approach to disaster recovery means there are fewer federal resources.

Disaster recovery researchers and survivors of disasters themselves have known for years that policymakers shouldn’t use the same old methods in the face of what is to come, but now they simply can’t. The nation was too reliant on a disaster recovery framework that prioritized cleaning up and rebuilding what was there before, instead of planning for the future. Now the money that supported the old framework isn’t flowing and a new vision is needed for how to survive disasters while adapting to a new climate reality.

Chaotic Austerity: 2025 as an Inflection Point

Twenty years ago, the failed response to Hurricane Katrina sparked an evolution in how the United States managed disasters. Congress, multiple presidential administrations, and states developed a strategy for disaster recovery that came to be shorthanded as “locally led, state managed, federally supported.”

August 29, 2025, was the twentieth anniversary of Katrina. Looking back, the anniversary also marked the midpoint of a year in which the structure of disaster recovery in America started to unravel. This unraveling came about not because of a particular hurricane or flood, but through a messy and uncoordinated policymaking process that sought to“get rid of FEMA the way it exists today.” According to one of the second Trump administration’s first executive orders in January 2025, the stated rationale for the policy shift was “serious concerns of political bias in FEMA” and a loss of “mission focus, diverting limited staff and resources to support missions beyond its scope and authority.” The order also spoke to a need to “drastically improve [FEMA’s] efficacy, priorities, and competence.”

Kristi Noem’s tenure as secretary of homeland security saw significant declines in the speed and scale of disaster response and an increase in partisan decisionmaking about which states got disaster programs approved. The administration did not achieve its stated policy goals and instead pursued a policy of chaotic austerity defined by three major trends:

1. Making fewer and more politicized disaster declarations, which limits the number of events that qualify for federal support
2. Transferring the costs of recovery onto states, including by delaying federal reimbursements to local and state governments for prior disaster costs
3. Ending federal policies and programs to mitigate future disaster risk

Each of these shifts represents an attempt to reduce federal spending on disaster recovery, while preserving the federal government’s ability to intervene in disaster policy and management on a selective basis. The shift fits into a broader pattern of the Trump administration consolidating executive authority, even in areas where policymaking has traditionally been dictated by Congress. While the Stafford Act—the main piece of legislation governing disaster response and recovery—dictates that FEMA undertake certain activities, the Trump administration has sought to maximize executive authority across all areas of federal governance. As at other agencies, the Department of Homeland Security (DHS) used executive orders, staffing decisions, funding approvals, and grant application processes to implement dramatic changes at FEMA throughout 2025.

More Frequent, More Partisan Denial of Disaster Declarations

Since 2003, the average denial rate for disaster declaration requests had been just under 18 percent. In 2026, the denial rate for requests made by Democratic governors was almost 54 percent.

In the twenty years following Katrina, the process of issuing decisions on disaster declarations did not merit significant attention—it was a routine, bureaucratic system with fairly consistent results. Since 2003 and the second George W. Bush administration, the average denial rate for all disaster declaration requests had been just under 18 percent. The graph of denial rates between 2003 and 2024 is relatively flat.

In 2026, the denial rate for requests made by Democratic governors more than tripled to almost 54 percent (see figure 2). Newly confirmed DHS Secretary Markwayne Mullin has promised to serve states equally, and a major test of his leadership will be whether he reduces partisanship in which states receive disaster declarations that allow them to benefit from FEMA’s programs.

The current approach to disaster declaration requests represents both chaos and austerity: The move away from predictable formulas and timelines means that state and local leaders—especially in Democratic-led states—can’t predict whether a disaster will garner federal resources and support.

The current approach to disaster declaration requests represents both chaos and austerity.

Slowed Reimbursements Reduce Spending Across All States

Republican-led states aren’t off the hook, either. Throughout 2025, the Trump administration pursued a policy of reduced spending out of FEMA’s Disaster Relief Fund (DRF). The DRF is a congressionally mandated fund that pays for the costs of disaster response and recovery, both through direct deployments of FEMA contractors and through reimbursements to state and local governments.

The president signaled the administration’s intent to “wean off of FEMA” for disaster recovery and “bring it down to the State level” at a June 2025 press briefing. At DHS, Noem implemented this policy by imposing a requirement that all payments over $100,000 had to be approved by the secretary herself, resulting in months-long delays in sending payments to local and state governments for projects that had already been approved by regional FEMA administrators.

As the New York Times reported in January 2026, the $100,000 policy resulted in $17 billion in spending being delayed because it had to wait for Noem’s personal approval. The policy is a stark example of the costs of federal austerity on local governments. Local governments often borrow to cover extraordinary disaster costs with the expectation of subsequent federal reimbursements; but because FEMA does not cover the cost of servicing emergency debt, delays in FEMA reimbursements can cause costs to balloon (and states vary significantly in their ability to access credit on favorable terms). For example, the New York Times reported that the city of Rock Valley, Iowa, borrowed $19 million to cover recovery costs from 2024 flooding, incurring $1,800 a day in interest for a city with an annual budget of less than $10 million.

Rebalancing the roles of federal, state, and local governments in funding disaster recovery and mitigation is a reasonable and necessary policy discussion in an era of increased disasters.

Mullin repealed the $100,000 policy as his first official DHS policy change on April 2, 2026. But with significant losses of experienced FEMA staff, the agency may struggle to clear the backlog of reimbursements quickly.

Rebalancing the roles of federal, state, and local governments in funding disaster recovery and mitigation is a reasonable and necessary policy discussion in an era of increased disasters. But without a clear process, states and local governments have no ability to plan and budget to fill the gap left by a retreating federal government.

Retreat from Mitigation Funding

Perhaps the clearest sign of federal austerity is the complete withdrawal of federal funds throughout 2025 for mitigation against future disaster damage. At an August 2025 meeting of the FEMA Advisory Council, Noem said, “The president believes that . . . long-term mitigation should not be something that the federal government is continuing to be involved in to the extent that it has been in the past.”

By the time the secretary made this announcement, the shift was already underway. FEMA had not approved a single request for Hazard Mitigation Grant Program funding since March 2025, despite thirty-nine requests from governors, including one request from Alaska on the day of Noem’s speech.

Earlier in 2025, FEMA had unilaterally canceled the Building Resilient Infrastructure and Communities (BRIC) program, suspending $4.5 billion in funding that state and local jurisdictions had already competed for. FEMA rolled out BRIC in 2020 to implement the requirements of the bipartisan Disaster Recovery Reform Act, which Trump signed into law in 2018. In 2020, the first Trump administration made $500 million in competitive funding available for pre-disaster mitigation activities.

Simply put, BRIC was designed to reduce the economic and human costs of disasters. The amount of funding paled in comparison to disaster recovery funding, but the program was popular on a bipartisan basis, in part because the evidence is so clear that investing in resilience represents huge cost savings in an increasingly disaster-prone world. The National Institute of Building Sciences estimates that federal grants for resilience have a six-to-one benefit-to-cost ratio.

As Iowa Homeland Security Director John Benson told the Council of State Governments in 2025, “In years past, the thought was, OK, if I spend a dollar on mitigation, it will take me a couple of disasters to get that dollar back. It’s a lot faster than that now. If we spend a dollar in mitigation now, we make it back with the next disaster.” For any administration interested in reducing federal spending, BRIC and programs like it are a sound bet.

While the 2025 BRIC suspension was challenged in the courts, projects that had spent years in permitting and design were abruptly stopped, causing jurisdictions that had spent time and money on permitting, design, and financing to lose years of effort and sometimes millions of dollars. Litigation eventually forced the Trump administration to reissue a Notice of Funding Opportunity in March 2026, but BRIC is now a one-time program, instead of an ongoing or expanding commitment to mitigation and resilience.

This creates a double-austerity bind for state and local governments: They face not only reduced and sporadic federal funding for disaster recovery, but also a near total withdrawal of federal support for projects that would reduce the costs of those future disasters. In an environment where there’s less money for recovery, prevention and preparation are obvious policy solutions. States that are hit hard by expensive disasters (largely concentrated in the Gulf South) will have to come up with their own funds and political will to make investments in mitigation with the withdrawal of federal support.

State and local governments face not only reduced and sporadic federal funding for disaster recovery, but also a near total withdrawal of federal support for projects that would reduce the costs.

Living with Disaster in an Age of Federal Austerity

Taken together, these three changes in policy represent a dramatic departure from the post-Katrina policy architecture: Rather than “locally led, state managed, and federally supported,” the new disaster aid approach features a much reduced role for the federal government in terms of both dollars and capacity to coordinate and backstop the states.

The policy reality that’s emerging in 2026 might be described as “locally led, state managed, and sometimes federally assisted.” As officials in the Trump administration intended, state and local governments suddenly have a much greater role to play in financing their own recoveries and building the capacities necessary to manage large-scale emergency response.

To be clear, it’s a desirable policy outcome for states to increase their capacity to respond to emergencies and to invest in their own resilience. The policy architecture developed in an era of fewer and less costly disasters was not purpose-built for today’s disasters. Frequent disasters—many of which hit expensive, densely populated urban areas—are a phenomenon that requires a different response than policies developed in the image of a once-in-a-lifetime disaster like Katrina.

Throwing federal money at disaster recovery without a strong policy imperative toward resilience and preparedness didn’t make sense before 2025, and it doesn’t make sense now to return to the pre-2025 status quo.

Throwing federal money at disaster recovery without a strong policy imperative toward resilience and preparedness didn’t make sense before 2025, and it doesn’t make sense now.

It’s more obvious than ever that the United States needs a stronger disaster policy architecture that extends beyond emergency management and into actual resilience planning as a matter of national security. Chaotic austerity is a disastrous distraction from that goal. A year of federal retrenchment that was politicized, disorganized, and without clear goals or transition timelines has set the country back in the badly needed policy work of planning and imagination about how to live in a disaster-driven climate. 

Finding Opportunity in Chaos 

The United States is in the early days of a new architecture for disaster recovery. Whatever happens at FEMA and DHS in the coming months, leaders across the country will have to fundamentally reimagine—and rebudget—how they respond to crises. A 2026 RAND report summarized the views of emergency management stakeholders from government, nonprofit, private sector, and research organizations who participated in an October 2025 workshop focused on managing escalating polycrises at the local level: “With shifting national priorities placing greater responsibility on state and local authorities despite limited resources, traditional federal-led disaster management frameworks are no longer sufficient on their own.”

There are early signs that Mullin is seeking to keep FEMA and DHS out of the headlines and return to a more functional, less politicized style of governance.But it isn’t clear that others in the administration have shifted away from a desire for austerity at FEMA.

Even if the policy of austerity starts to become less chaotic under new DHS leadership, we anticipate far-reaching effects from the past year: a widening gap between high- and low-resource places in their ability to sustain services and even population in the aftermath of disasters; rising housing costs in lower-risk areas as more people seek to escape the high costs of insurance and rebuilding in disaster-prone areas; and less access to finance for resilience even as spending on prevention becomes more valuable than ever.

If there’s a silver lining to chaotic austerity, it’s that sudden federal retrenchment in 2025 has opened up space for a reimagined disaster policy ecosystem in the United States. On their own, the increased pace and costs of disasters in a changing climate were not forcing a move toward greater resilience or equity in disaster recovery. In the twenty years between Katrina and the first year of the second Trump administration, the United States was simply spending more, instead of spending smarter, for the climate at hand.

If there’s a silver lining to chaotic austerity, it’s that sudden federal retrenchment in 2025 has opened up space for a reimagined disaster policy ecosystem in the United States.

The next plastic policy moment has arrived, when change is possible for a better, more adaptive disaster policy. Over the next few years, there will be room for debate at federal, state, and local levels on how best to respond to disasters and build the United States’ collective resilience to climate hazards. Navigating this opportunity and emerging with a more resilient disaster policy will require several changes in approach at the policy level to connect stakeholders from different disciplines and geographies in new ways:

• Developing a field of practice around disaster-based adaptation. The field should include traditional players like emergency managers and academics, while extending to include frontline local officials, disaster survivors, and the private sector (especially the insurance industry) as stakeholders.
• Collaborating across disaster-prone regions to anticipate and accommodate future displacement patterns. With reduced federal spending to backstop recovery, destination communities—whether they are inland small towns or large coastal cities—should band together on strategies for maximizing the potential benefits of new arrivals.
• Streamlining federal programs to reduce administrative costs and prioritize resilience. Anyone who has worked in disaster recovery or resilience recognizes the administrative burden of accessing federal funding. As federal programs are being reimagined, there’s an opportunity to reduce the number and complexity of programs and to clarify a national strategy on resilience.
• Supporting states in planning and budgeting for resilience and emergency funding. However federal policy is remade in the coming years, states will bear more of the cost burden of disaster recovery than they have in the past two decades. States are already taking action, but will need more support to balance their budgets while accommodating increased disaster-related expenses.
• Strategically deciding not to rebuild, where and when appropriate. Austerity sharpens the need to prioritize. In a country where 20 to 40 percent of households are uninsured in some high-risk locations, rebuilding in place won’t be feasible for large portions of the population. Philanthropy can play a leading role in helping climate vulnerable communities plan for the future, including by deciding not to fund repeated rebuilding with philanthropic relief dollars.

The ecologist Joanna Macy and resilience trainer Chris Johnstone wrote for many years about the concept of “active hope,” which they described as being rooted in desire—knowing what we want to happen and becoming active participants in making it so. Sudden federal retrenchment exactly when the climate is becoming more extreme can feel like a time for despair. Certainly, there is grief in facing the trauma and even displacement that disasters will cause in the coming years. But active hope is also possible—that the United States can build a better, more resilient world through the collective resilience of American communities and their response to disasters. 

This article represents the views of the authors only and not those of Episcopal Relief & Development.