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Homeland Security and
the Private Sector
  December 2004  


Cover Graphic
© Royalty-free/Corbis



Note

On the cover, the photograph of the barley crop in Washington County, Virginia, is by Jeff Vanuga, courtesy of the U.S. Department of Agriculture, National Resources Conservation Service. The photograph of the chemical decontamination room is courtesy of the Department of Energy's Office of Environmental Management.





                
Preface

The events of September 11, 2001, raised the nation's awareness of the threat of terrorist attacks. The private sector generates the vast majority of the nation's economic output, and businesses may find it in their interest to undertake measures that can help reduce the nation's vulnerability to attack and the subsequent potential losses. This Congressional Budget Office (CBO) paper, prepared at the request of the Ranking Member of the House Select Committee on Homeland Security, examines the role of the private sector in responding to the threat of terrorism in the United States since September 11. In keeping with CBO's mandate to provide objective, impartial analysis, the paper makes no recommendations.

Richard D. Farmer wrote the paper, with contributions from Andrew Goett, Nathan Musick, and David Torregrosa, under the supervision of Roger Hitchner and David Moore, all of CBO's Microeconomic and Financial Studies Division. Robert Shackleton and Michael Gilmore of CBO provided helpful comments on earlier drafts of this paper. Paige Piper-Bach reviewed the manuscript for factual accuracy. The paper also benefited from comments by Jay Apt of the Tepper School of Business at Carnegie Mellon University, James C. Belke of the Environmental Protection Agency, and Kevin Crowley of the National Research Council's Board on Radioactive Waste Management, as well as from conversations with Alison Silverstein, former senior adviser to the Chair of the Federal Energy Regulatory Commission. (The assistance of external participants implies no responsibility for the final product, which rests solely with CBO.)

Janey Cohen edited the manuscript, and Christian Spoor proofread it. Maureen Costantino prepared the paper for publication and designed the cover, Lenny Skutnik produced the printed copies, and Annette Kalicki prepared the electronic versions for CBO's Web site.

Douglas Holtz-Eakin
Director
December 2004




CONTENTS
 
  Summary
 
1  Introduction
      What Is Homeland Security?
      A Focus of Security Concerns: Critical Industries
      Why the Private Sector Might Spend Too Little on Security
      What Is the Government's Role?
      The Government's Response Since September 11--A Baseline for Further Change
      Improving Homeland Security--A General Framework
      Scope of the Analysis
 
2  Civilian Nuclear Power
      Vulnerabilities from Attacks on Power Reactors and Spent Material
      Potential Losses from Exposure to Radioactivity and Destruction of Power Facilities
      Current Programs for Plant Safety, Control over Nuclear Materials, and Compensation for Losses
      Ideas for New Approaches to Nuclear Power Security
 
3  Chemicals and Hazardous Materials
      Vulnerabilities from Processes,Transportation, and Misuse of Materials
      Potential Losses from Explosions and Toxic Releases
      Current Programs for Safety and Emergency Preparedness
      Ideas for New Approaches to Chemical and Hazardous-Material Security
 
4  Electricity Service
      Vulnerabilities from Disruption of Regional Transmission
      Potential Losses from Disruption of Vital Services
      Regulating for Reliable Electricity Service
      Ideas for New Approaches to Reliable Electricity Service
 
5  Food and Agriculture
      Vulnerabilities from Contamination, Loss of Food Sources, and Use of Agricultural Resources as Weapons
      Potential Losses from Threats to Health or Consumers' Aversion to Contaminated Products
      Current Programs for Food Safety
      Ideas for New Approaches to Food and Agriculture Security

Boxes
   
1-1.  Changing Concepts of Critical Infrastructure
1-2.  Government Efforts to Share Information with Industry
4-1.  Vulnerabilities, Potential Losses, and Regulatory Regimes for Large Dams and Reservoirs
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