2.5 Million Homes, Businesses Totaling $1 Trillion Threatened by High Tide Flooding

June 28, 2018

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(Union of Concerned Scientists) Study Finds Coastal Municipalities May Lose Huge Sums in Property Tax Revenue -- Accelerating sea level rise in the lower 48 states, primarily driven by climate change, is projected to worsen tidal flooding, putting as many as 311,000 coastal homes with a collective market value of about $117.5 billion today at risk of chronic flooding within the next 30 years—the lifespan of a typical mortgage—according to a new report by the Union of Concerned Scientists (UCS) released today. Roughly 14,000 coastal commercial properties assessed at a value of roughly $18.5 billion also are at risk during that timeframe. By the end of the century, homes and businesses currently worth more than $1 trillion could be at risk: as many as 2.4 million homes—roughly the equivalent of all the homes in Los Angeles and Houston combined—valued at approximately $912 billion and 107,000 commercial properties assessed at $152 billion.

The analysis uses property data from the online real estate company Zillow combined with a peer-reviewed methodology developed by UCS for assessing areas at risk of frequent flooding. Using three sea level rise scenarios developed by the National Oceanic and Atmospheric Administration (NOAA), UCS determined how many residential and commercial properties along the entire lower 48 coastline are at risk of becoming chronically inundated from high tides, flooding an average of 26 times per year or more, in the coming decades even in the absence of major storms. The core results in the report are from the high sea level rise scenario—an appropriately conservative projection to use when estimating risk to homes, which are often the owner’s single biggest asset.

“What’s striking as we look along our coasts is that the significant risks of sea level rise to properties identified in our study often aren’t reflected in current home values in coastal real estate markets,” said Rachel Cleetus, an economist and policy director for the Climate and Energy Program at UCS, as well as a report co-author. “Unfortunately, in the years ahead many coastal communities will face declining property values as risk perceptions catch up with reality. In contrast with previous housing market crashes, values of properties chronically inundated due to sea level rise are unlikely to recover and will only continue to go further underwater, literally and figuratively.”

The consequences of chronic flooding of properties in specific communities could translate not just into eroding property values, but also into unlivable houses and falling tax revenues that fund schools, roads and emergency services in those places. The properties at risk by 2045 currently house roughly 550,000 people and contribute nearly $1.5 billion toward today’s property tax base. These numbers jump to about 4.7 million people and $12 billion by 2100. Municipalities are looking at even deeper revenue declines when commercial property, sales, and other business tax losses are factored in.

“For some communities, the potential hit to the local tax base could be staggering,” said Kristy Dahl, senior climate scientist at UCS and report co-author. “Some smaller, more rural communities may see 30, 50, or even 70 percent of their property tax revenue at risk due to the number of chronically inundated homes. Tax base erosion could create particular challenges for communities already struggling with high poverty rates.”

According to the analysis, states with the most homes at risk by the end of the century are Florida, with about 1 million homes or more than 10 percent of the state’s current residential properties, New Jersey with 250,000 homes, and New York with 143,000 homes. States that could lose the most in home property values by 2100 are Florida at $351 billion, New Jersey at $108 billion, and New York at nearly $100 billion. Decreases in property values also mean a lower property tax base. Florida, New York and New Jersey will see the biggest hits to their annual property tax revenue with municipalities losing about $5 billion, $1.9 billion and $1.7 billion total respectively.

“Not all affected communities will share the same experience,” said Erika Spanger-Siegfried, senior analyst in the Climate and Energy Program at UCS and report co-author. “Some may see sharp adjustments to their housing market in the not-too-distant future; some could see a slow, steady decline in home values; and others could potentially invest in protective measures to keep impacts at bay for a few more decades. In any case, by knowing how much time they have before a significant number of properties will be regularly flooded, communities can start planning and implementing responses now, while they still have a range of options from which to choose.”

Economic consequences could also hit some communities harder than others. Nearly 175 communities would expect to see 10 percent or more of their homes at risk of chronic flooding by 2045, with nearly 60 of those communities experiencing poverty levels above the national average. Additionally, of the roughly 75 communities with 30 percent or more of their property tax base at risk, about one-third of these have poverty rates above the national average. The places that could be hit hardest in this way include communities in: Louisiana, Maryland, New Jersey, and North Carolina. Similarly, communities with large African American or Hispanic populations—many located in California, Florida, Louisiana, New Jersey, New York, South Carolina and Texas—could also be at an inherent disadvantage in taking steps to prevent or recover from chronic flooding, due to longstanding social and economic inequities.

“While wealthier homeowners may risk losing more of their net wealth cumulatively, less-wealthy ones are in jeopardy of losing a greater percentage of what they own,” said Cleetus. “Homes often represent a larger share of total assets for elderly or low-income residents. Renters too might find themselves in a tight market or having to put up with decaying buildings and increased nuisance flooding. Hits to the property tax base in low-income communities, which already experience significant underinvestment in critical services and infrastructure, could prove especially challenging.”

Meanwhile, the loss of coastal property values will have reverberations throughout the economy—affecting banks, insurers, investors, and developers—potentially triggering regional housing market crises or a more widespread economic crisis. Homeowners whose properties become chronically inundated could find themselves with mortgages that exceed the value of their homes, face steeply rising flood insurance premiums, or even default on their loans. Lenders carrying large numbers of these risky mortgages could lose money or eventually become insolvent, with smaller banks concentrated in regions with high flood risk being especially exposed. Coastal real estate investors and developers may similarly experience financial losses in some coastal areas.

“Actions today, especially the amount of global warming emissions we release, will help determine what our coasts will look like at the end of the century,” said Astrid Caldas, senior climate scientist at UCS and report co-author. “If we manage to meet the goals of the Paris Agreement by keeping warming to between 1.5 and 2 degrees Celsius and if ice loss is limited, 85 percent of all affected residential properties—valued at $782 billion today and currently accounting for more than $10.4 billion in annual property tax revenue to municipal governments—could avoid chronic flooding this century. The longer we wait to drastically reduce emissions, the less likely it is that we will achieve this outcome.”

There are currently many well-intentioned federal, state and local policies that mask risk and create incentives that reinforce the status quo or even expose more people and property to risk. The market’s bias toward short-term decision-making and profits can also perpetuate risky investment choices. These flawed policies and incentives include inaccurate flood risk information, subsidized insurance, lax zoning and building codes, incentives for business-as-usual building and re-building, and incomplete credit ratings.

“Targeting improvements to the policies and market drivers of risky coastal development is essential to better protect communities and move the nation toward greater resilience,” said Shana Udvardy, climate resilience analyst at UCS and report co-author. “Short-sighted policies and market drivers will need to be phased-out to discourage risky behavior and to ensure changes won’t be too jarring on homeowners and the real estate market.”

To view the report PDF, click here.

Spreadsheets with data about the chronically inundated properties are available and can be sorted by state, by community (delineated by the Census Bureau as county subdivisions), and by ZIP code.

To use the interactive mapping tool, click here. The map allows you to learn more about the impact of chronic inundation on properties, people, home values and the tax base in specific states, communities or ZIP codes. When you zoom in, the maps become more detailed. You can also click on a specific state or community for more details about it.

For all other materials, including our methodology document, a compilation of interviews with additional experts on this topic, and Spanish-language materials, click here. READ MORE

Study: Sea level rise threatens 2.4M US homes (Utility Dive)

Rising Seas Could Menace Millions Beyond Shorelines, Study Finds -- As climate change raises sea levels, storm surges and high tides will push farther inland, a team of researchers says. (New York Times)

Life in Miami on the Knife's Edge of Climate Change (The New Yorker)

Sea level rise is eroding home value, and owners might not even know it (Washington Post)

Climate change is bad news for your beach vacation: Will sea walls replace accessible beaches in our lifetimes? (Washington Post)

Florida Sees Signals of a Climate-Driven Housing Crisis: Home sales in areas most vulnerable to sea-level rise began falling around 2013, researchers found. Now, prices are following a similar downward path. (New York Times)

MORTGAGE COMPANIES TAKE CLOSER LOOK AT CLIMATE: (Politico's Morning Energy)

As Flood Plains Expand, Sellers Continue to Hide Risk from Residents (Our Daily Planet)

Excerpt from Utility Dive: Dive Insight: The UCS study is based on an analysis of data made available by real estate company Zillow. The researchers considered "chronic flooding" to be areas that are flooded 26 times per year or more in the next several decades, even without major storms. It includes interactive maps that show flood risks nationally, by state, by city and by ZIP code.

This study is significant because of the large number of Americans living in what are considered coastal areas; populations in coastal communities are denser than in other parts of the country and continue to increase. The National Oceanic and Atmospheric Administration estimates that 40% of Americans lived along the shore in 2010, and that number is expected to increase 8% by 2020.

This study does not bode well for communities that are already experiencing the effects of sea level rise. South Florida, which is an area of particular concern in the UCS study, is a prime example. Sea level rise in cities like Miami has become so well known that leaders and organizations are actively looking for ways to mitigate the problem. For example, this spring the Knight Foundation granted the Harvard University Graduate School of Design $1 million for a three-year study to come up with solutions to Miami's and Miami Beach's most pressing sustainability and resiliency challenges, including climate change.

South Florida's situation also highlights the inequity often evident in flood plain management. As some wealthy Miami Beach residents fear losing their homes to flooding on the coastal island, they're apparently looking to move onto the mainland, into Miami. But the higher-ground areas they're reportedly eyeing for relocation are low-income neighborhoods that could be razed and redeveloped to accommodate high-income housing. Plus, the UCS study points out that low-income neighborhoods have fewer resources to prevent or recover from chronic flooding.

Relocating to mainland Miami isn't necessarily a long-term answer for escaping devastating floods, either. Like Ft. Lauderdale and most other parts of South Florida, in recent years Miami has been affected by king tides, which cause ocean water to flood streets during certain tidal pulls, even if it hasn't rained. Researchers expect more coastal communities throughout the country to experience this kind of flooding in the coming years if conditions remain the same. READ MORE

Excerpt from Washington Post: A hard structure might keep the land behind it safe from the intense energy of ocean waves. But all that energy will instead erode the sandy beaches in front of the sea wall, erasing the places where people like to lounge and play. Shoreline habitats that have evolved with the give and take of the tides — salt marshes, sea grass meadows, rolling expanses of sand dunes — will also be disrupted. And, by deflecting the force of oncoming waves, “hard defenses” in front of one community may contribute to a greater deluge in another.

There are alternatives to sea walls. Some communities use barge loads of sand to replenish their depleted beaches, a practice called “beach nourishment.” This can help counter storm surge, but it requires constant upkeep. Piles of boulders known as “rip rap” or “rock armor” can absorb the force of powerful waves. Jetties — breakwaters constructed perpendicular to the shore — can also protect a coastline, although they may interfere with the natural movement of sand and rocks.

Nature has its own mechanisms for protecting against storms. The dense, anchored root systems of mangrove forests help dissipate storm energy, prevent erosion and filter water as it drains from the land into the sea. As an added bonus, the world’s mangroves are a potent tool for removing greenhouse gases from the atmosphere; one study found that 75 billion pounds of carbon are sequestered in these rich habitats each year.

Oyster beds provide a natural breakwater in front of coastal communities. READ MORE

Excerpt from Politico's Morning Energy: MORTGAGE COMPANIES TAKE CLOSER LOOK AT CLIMATE: New U.S. government-backed research shows housing markets are beginning to respond to damages from climate change-fueled floods, storms and disasters, Pro's Zack Colman reports.

Mortgage companies Fannie Mae and Freddie Mac recorded changes in home sales prices and an uptick in mortgage defaults among damaged properties in Texas after 2017's Hurricane Harvey. Freddie Mac found housing prices inside the federal floodplain fell sharply compared to those outside the vulnerable zone, after the storm. Separately, Fannie Mae discovered homes outside the 100-year floodplain — which aren't required to have flood insurance — were more likely to experience mortgage defaults after severe flood damage.

"In general there has been increasing concern on increasing flood and storm risk on mortgage markets," said Carolyn Kousky, executive director of the University of Pennsylvania's Wharton Risk Management and Decision Processes Center. READ MORE