Ask a Scientist – July 2018
Dr. Rachel Cleetus, lead economist and policy director with the UCS Climate and Energy Program, answers the questions “What are the major economic implications of sea level rise?” and “What can we do about it?”
Sea levels are rising at an accelerating rate along the US coastline, contributing to worsening high tide flooding. Earlier this summer, we released a report that found that in the next 30 years—within the lifetime of a typical mortgage issued today—more than 300,000 homes along our coast worth $117.5 billion today are at risk of becoming chronically flooded. They house more than a half million people and contribute nearly $1.5 billion toward today’s property tax base. By the end of the century, 2.5 million homes and commercial properties, worth over $1 trillion today, are at risk.
That’s a lot of families and a lot of neighborhoods facing regular flooding. It also means a large potential impact on municipal tax bases which help fund schools, emergency services, roads, and other vital local services and infrastructure. And, as more communities face this threat, the economic repercussions are likely to hit mortgage lenders, bond investors, insurers, real estate developers, and taxpayers too.
The report is accompanied by an online interactive mapping tool where you can look up the risks of chronic inundation in the contiguous United States down to the zip code level.
Some places are more exposed than others in the near term; many more will be by mid-century and beyond. Florida, New Jersey, New York, and California are among the states with the most homes and property value at risk. Many places, including in Florida, California, Louisiana, Maryland, New Jersey, North Carolina, South Carolina, and Texas could face disproportionate harms because they also have poverty rates above the national average or are home to large communities of color in which people have faced longstanding social and economic inequities.
Unfortunately, most homeowners and communities are unaware of these risks or the potentially enormous financial losses they may face. A combination of shortsighted policies and market incentives serve to mask risk and perpetuate risky patterns of coastal development and investment.
But, sooner or later, market risk perceptions will catch up with the physical reality of sea level rise. The timing of a market correction in coastal property values remains uncertain. It will vary from place to place, and it is unclear whether it will come in the form of a sharp decline or a slow steady downward spiral. But the scale of the problem is large enough that, when enough major market actors become aware of and begin to act on these risks, it could potentially trigger a regional housing market crisis, or even a more widespread economic calamity.
Of course, properties will not be the only things to flood. Roads, bridges, power plants, airports, ports, public buildings, military bases, and other critical infrastructure along the coast also face the risk of chronic inundation. Taken together, the costs associated with chronic flooding of our coastal built environment—both property and infrastructure—are likely to be staggering.
Communities along the coast need to be clear-eyed about this situation and should try to take action before the worst of these risks unfold. Unlike the properties in previous real estate market crashes, properties threatened by sea level rise are unlikely to recover their value and will only go further underwater with time.
There’s no doubt that the enormity of the challenge is daunting. There is a lot at stake—both in human terms and in terms of potential economic losses. But there are things we can do to try to limit the harms. In our report, we point out the need for local, state, and national action to help ensure equitable, timely access to adaptation measures for coastal communities.
A crucial first step for communities, policymakers, and key players in the financial sector is to better understand their risks and the timeframe available for a robust response. If you own a home on the coast, or plan to buy one, it’s important to find out about your risk (download our pdf guide). If you are in any way invested in the coastal real estate market, it’s important to know how exposed your investments are to the risk of sea level rise. If you are a local policymaker or planner, you need to understand these risks and help communicate about them to your community, while advocating for the tools, resources, and funding your community needs to assess the risks and develop options to respond.
We must harness policy and market solutions that work for people, ecosystems, coastal heritage, and the economy. This means: investing in updated flood risk maps that reflect the latest science; reforming the National Flood Insurance Program so that it helps promote coastal resilience instead of subsidizing risky choices and includes affordability provisions for low- and fixed-income folks; ramping up investments in flood mitigation measures prior to disasters, with resources specifically targeted to disadvantaged communities; increasing funding for voluntary home buyout programs; implementing a flood-ready standard for federal investments; setting robust uniform standards and guidelines for flood risk disclosure including for real estate transactions; and investing in bold, transformative policies to help protect people over the long-term and foster new opportunities on safer ground for those who need to relocate—especially those who have fewer resources to cope on their own.
Our research also shows that if we join the global community in making deep cuts in emissions in line with the long-term temperature goals of the Paris Climate Agreement, and if land-based ice loss is limited, we can limit the magnitude and pace of sea level rise, especially in the latter half of the century. And that means we can limit the scale of the economic losses and harms to people.
The key is to use the time we have to respond wisely and take the deep, transformative actions needed to confront this profound problem.
Rachel Cleetus is the lead economist and policy director with the Climate and Energy program at the Union of Concerned Scientists. She designs and advocates for effective global warming policies at the federal, regional, state, and international levels. She also analyzes the economic costs of inaction on climate change. Dr. Cleetus holds a Ph.D. and an M.A. in economics from Duke University and a B.S. in economics from West Virginia University.