Protecting Our Homeland: Incorporating Terrorism Risk in State Homeland

Protecting Our Homeland: Incorporating Terrorism Risk in State Homeland
Security GrantsAlexia BrunetPh.D. Candidate, Purdue University
J.D. Candidate, Northwestern School of LawABSTRACTVulnerabilities realized following the terrorist attacks of September 11, 2001 highlight the need for the Federal government to allocate funding for the prevention and response to terrorist events at the risk factor level. However, the funding formula used by the State Homeland Security Program (SHSP) relies upon a lump sum to all states plus an incremental amount allocated according to population. Therein the formula does not explicitly address varying risks across States. The objective of this paper is to formulate theoretically an alternative formula to distribute SHSP funding based on terrorism risk across States. Unique Indiana county-level risk factor data are used to infer the optimal funding to cover expected damages associated with various infrastructure categories: hazardous material sources, Federal and State facilities, hospitals, interstates, pipelines, power generation, public water supply points, surface water intakes, airports, universities, and confined feeding operations. Risk-based allocations to the 50 States are calculated using the Indiana implied optimal weights as a reduced form of expected damage exposure. Finally, we use the deviation between the current allocations and the risk model calculated allocations to assess (i) which risk assets and (ii) which States are under funded by the current government allocation.

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