Rural communities with the fewest resources for climate change preparedness have a harder time qualifying for the federal grants that could help, according to a study by a nonprofit research firm.

Local Matches Hurt Rural Communities

“For decades we’ve known there are many communities that struggle to access the federal resources they need,” said Kristin Smith, PhD, of Headwaters Economics in a phone interview. “When these communities can’t [raise money for the match], they end up in a downward spiral.”

Local match requirements are the share of the project costs that federal grants require communities to pay and they typically don’t change depending on the community’s population size or wealth. That makes it harder for rural or under-resourced communities to pay the same amount for a local match as an urban area.

“When projects have fixed costs, local match requirements create disproportionate burdens on rural communities where there are fewer people to foot the bill,” Kristin Smith wrote. 

She also found that mitigation projects can be more expensive in rural areas, “where larger-scale projects are often required to protect those living in lower-density areas.”

Many rural communities have what Smith calls capacity gaps, or a lack of staff and resources they need to plan and obtain funding for mitigation projects. The federal grant application process is tedious, and many other communities don’t know where to start.

There’s no data on how many communities forgo the grant application process, but Smith said she knows that, at least anecdotally, many communities in need decide not to apply at all because of the match requirements.

“We need to start rethinking some of our systems,” she said. 

Climate Risk in Rural America

As climate change accelerates and global temperatures rise, experts say major flooding may become more commonplace. More heat means more water evaporation, which changes the size and frequency of heavy precipitation events. 

FEMA’s Building Resilient Infrastructure and Communities (BRIC) program is an attempt to help communities be proactive instead of reactive about climate change by funding large-scale hazard mitigation projects. But it’s come under scrutiny for inequalities in funding opportunities. In the fiscal year 2020, wealthier communities received more than their share of funding, while many rural and under-resourced communities failed to receive aid.

But FEMA’s BRIC program is not the only federal program that underserves rural communities. A 2023 report from Smith and Headwaters Economics looks at how local match requirements from federal grant programs disqualify some communities that can’t come up with the funds and deter others from even applying.

Three Forks, Montana

In 2022, the rural community of Three Forks, Montana, received a FEMA flood mitigation grant for $4.15 million, contingent on final reviews. The grant would help fund a $5.5 million grass-line conveyance channel to divert floods from town back into the Jefferson River.

“We have to come up with between $1.2 to $3 million on our own,” said Kelly Smith, the city treasurer of Three Forks, Montana. “It’s kind of a challenge to come up with that extra money to do a project.”

The city of Three Forks only brings in less than half a million dollars in annual revenue from taxes, so a multi-million dollar flood mitigation project is a major undertaking, even though the city has been saving money for it. 

“We had been putting money aside knowing that a project was probably coming either for paving streets or for flood plain,” said Kelly Smith. “But the total in that account is less than $500,000.”

That’s less than half the cost of the lowest estimate of the match requirement. To raise money for the project, Three Forks created a Special Improvement District (SID), or where the city raises taxes in an affected area to increase revenue for a project. 

There are a few more steps the town needs to complete before they can officially be awarded the money. Part of the match money is currently going towards environmental feasibility studies done by Great West Engineering, while other funds are geared towards drafting easements for channels that pass through private property.  

Kelly Smith said they hope to start digging the channel in 2024. 

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