The Barnier fund, officially known as the Fonds de prévention des risques naturels majeurs (FPRNM), is a vital resource for natural hazard prevention in France. Established in 1995, it supports local authorities and individuals in reducing building vulnerabilities to disasters, funded through state budget allocations and insurance taxes. Recently, the fund has sparked controversy over its stable budget amid rising tax proceeds, leading to tensions between the government and insurers regarding its financial capabilities and management practices.
Understanding the Barnier Fund: A Key Player in Natural Disaster Preparedness
Purpose of the Barnier Fund
The Fonds de Prévention des Risques Naturels Majeurs (FPRNM), commonly referred to as the “Barnier fund,” serves as a crucial component of France’s strategy for natural disaster risk prevention. According to the public reinsurer, CCR, this fund plays an essential role in enabling local governments, small businesses, and private homeowners to undertake projects aimed at decreasing the vulnerability of structures prone to natural disasters. Since its inception in 1995, the fund was initially designed to compensate property owners whose land was expropriated due to significant natural hazard events. However, it has since expanded its focus.
Between 2009 and 2020, the Barnier fund supported around 700 preventive projects, averaging over 170 million euros annually, which totals more than 2 billion euros in the last decade alone. Notably, over half of these projects involved the establishment or enhancement of flood protection infrastructure, such as dikes and regulation structures. Additional funding sources, such as support from local governments or the European Regional Development Fund (ERDF), have further bolstered natural disaster prevention initiatives, nearly doubling annual averages.
Funding Sources
As of 2021, the FPRNM has been incorporated into the state budget, with its funding determined by parliamentary vote. Recently, Minister of Ecological Transition and Energy, Agnès Pannier-Runacher, indicated that the fund’s budget is approximately 250 million euros. She emphasized that the Barnier fund is not solely financed by public monies; partnerships with insurers also contribute significantly.
Historically, until 2020, the fund’s replenishment came from a tax on the natural disaster “surcharge” levied on multi-risk home insurance policies, providing financial support to the CCR when natural disaster declarations were made. This tax will see an increase from 12% to 20% starting January 1, 2025, which could significantly enhance the fund’s resources in the upcoming year. The CCR has advocated for a gradual increase in financial allocations to prevention efforts due to anticipated hikes in claim costs by 2050.
Controversies Surrounding the Fund
Recently, Florence Lustman, president of France Assureurs, raised concerns regarding proposals to keep the Barnier fund’s resources stable in the 2025 budget, despite the anticipated rise in tax revenues. “Let’s stop the hold-up on the Barnier fund!” she declared on France Info, expressing frustration over the situation.
Insurers view prevention as a vital means of mitigating claims, and the Senate Finance Committee has pointed out a potential shortfall of 73 million euros between the Barnier fund’s budget and revenues generated from natural disaster coverage for 2023. Lustman argues that the fund should reach approximately 450 million euros by 2025, but currently only half of this amount is available.
Michel Barnier himself believes that this fund could be instrumental in financing the upcoming national climate change adaptation plan. This plan, set to be unveiled at the end of October, is considered a top priority for the country.
The Barnier fund has faced scrutiny before, with the Cour des Comptes highlighting issues such as convoluted accounting practices, poorly evaluated expenses, and cases of unjustified compensation in a report released in March 2017. The Court detailed how the fund has at times used its resources to cover routine state expenditures, such as local authority grants and studies, which inadvertently inflated its financial obligations.