Who’s Really at Risk?

FEMA flood zone maps have become the de facto source of flood risk information for homeowners, even though many have not been updated in a decade.

“We know the maps are fundamentally wrong,” said Matthew Eby, founder and executive director of First Street, a nonprofit that advocates for providing homeowners with more information about flooding and climate change. “The maps are out of date.”

Budget constraints have meant that large areas, mainly in the middle of the country, that are at risk of flooding from rivers and heavy rainfall aren’t mapped at all, according to an analysis of FEMA data by First Street, which is working with academics to build a database to address the issue.

Meanwhile, homeowners today may not see any publicly available information until they are at the closing table and it can be too late to walk away.

David Maurstad, deputy associate administrator for insurance and mitigation at FEMA, said the federal flood maps weren’t designed as a tool for homeowners to assess their risk of flooding but to determine whether homeowners were required to purchase flood insurance.

“That binary approach has had some unintended consequences,” he said. “People who are out of the high-risk areas don’t realize they need to take action.”

First Street is among a handful of organizations trying to improve flood disclosure. In collaboration with Columbia University, the Massachusetts Institute of Technology, the University of California at Berkeley and other institutions, it is assembling a comprehensive database on whether homes in the U.S. have previously flooded or are at risk of future flooding.

First Street and its partners use satellite imagery, high-water-mark data and other information to model whether homes would have been flooded. It combines this with FEMA data on flood claims that already exist but are difficult for ordinary homeowners to access.

Such information has long been available to large institutional real-estate owners and insurance companies, but it is far too costly for most individual homeowners to obtain. First Street’s database, which it expects to launch within a year, will be available, free of charge, for individual homeowners.

Mr. Maurstad said FEMA is working on making data about flooding more easily available and giving owners a more nuanced picture of whether their home is at risk. He welcomes efforts by First Street and others.

Still, some economists think these private databases bring problems of their own. While mapping flooding risk isn’t an exact science, just the suggestion of elevated flood risk can scare off buyers and devastate an owner’s ability to sell his or her home.

That is a concern for Skylar Olsen, a senior economist at Zillow Group Inc. who said the company is looking at providing flood-risk information on its site but worries consumers may not understand the margin of error inherent to such information. Scientists don’t agree on how much sea levels will rise in the coming decades, how much rising temperatures will affect the severity of storms and other unknowns.

“How do you represent that kind of number that can have a big impact on my willingness to buy this place, my ability to sell this place?” she said.

First Street said it is working with the Wharton Risk Management and Decision Processes Center at the University of Pennsylvania on how to communicate the information in a way that conveys its limitations.

“Knowing that a property is at risk is going to lower its value, and that’s going to be upsetting. Hiding the risk isn’t going to be helping anyone, it’s just hiding the risk until later on,” said Carolyn Kousky, executive director of the Wharton center.

Write to Laura Kusisto at laura.kusisto@wsj.com