Taxpayers are propping up wildly-inflated coastal property values. At some point, we’ll stop doing that, and coastal property values will crash.
Unless they have already crashed because Miami gets hit by its equivalent of Superstorm Sandy. Or because the smart money pulls out of coastal real estate ahead of time after realizing that our climate inaction has made the crash inevitable — due to a combination of faster-than-expected sea level rise and ever-worsening storm surges.
The main prop is the National Flood Insurance Program, which covers $484 billion in Florida property alone, “often at below market rates,” as Reuters has explained. Florida state officials denying the reality of climate change does not help either.
But a recent study, “Climate Adaptation and Policy-Induced Inflation of Coastal Property Value,” points out that taxpayer-subsidized beach sand replenishment programs are also inflating the bubble. The researchers found “that a sudden removal of federal nourishment subsidies, as has been proposed, could trigger a dramatic downward adjustment in coastal real estate, analogous to the bursting of a bubble.”
How big a crash would the subsidy removal trigger? “Values could erode by as much as 17 percent in towns with high property values and almost 34 percent in towns with low property values,” in parts of New Jersey and North Carolina, one author explained. The crash would be bigger if we waited a decade before removing them.
Just how big are these subsidies? The study explains, “Between 1995 and 2002, the U.S. federal government spent $787 million on beach nourishment and has historically subsidized two-thirds of total nourishment costs to coastal communities.”
But if removing the subsidies would cause a crash, then why remove them? Well, as seas rise and storms surge, replenishment costs rise. An article by the New England Center for Investigative Reporting (NECIR) notes, “The sand used to fortify beaches has also become something of a precious commodity, shockingly expensive and difficult to mine and move.”
Yes, of all things, sand is now a precious commodity — one that people are fighting and dying over. If you find that hard to believe, check out this March story from WIRED, “The Deadly Global War for Sand,” which reports, shockingly, “Today criminal gangs in at least a dozen countries, from Jamaica to Nigeria, dredge up tons of the stuff every year to sell on the black market.”
It turns out we use over “40 billion tons of sand and gravel every year,” and that’s growing exponentially, according to WIRED. “There’s so much demand that riverbeds and beaches around the world are being stripped bare.”
What about all that desert sand? It just doesn’t cut it for concrete-driven construction, which continues to explode around the world, especially in parts of Asia and the Middle East. As a result, “exporters in Australia are literally selling sand to Arabs.”
So where is all the sand coming from? Well, as land quarries and riverbeds run out, “sand miners are turning to the seas, where thousands of ships now vacuum up huge amounts of the stuff from the ocean floor.” And that “often wreaks havoc on rivers, deltas, and marine ecosystems.”
It’s already happening here. Here’s an extended NECIR/WGBH story on “Sand Wars” in the Bay State.
And then there’s global warming, which is accelerating beach erosion and which makes the death of essentially all major beaches inevitable. We may not have reached “peak sand” yet, but we have reached “peak beaches.”
Last May, we learned that the West Antarctic Ice Sheet (WAIS) appears close to, if not past, the point of irreversible collapse — and that “Greenland’s icy reaches are far more vulnerable to warm ocean waters from climate change than had been thought.” In August we learned both of those ice sheets had more than doubled their rate of ice loss in the last five years. This year we learned part of the East Antarctic Ice Sheet is as as unstable and as vulnerable to melting from underneath as WAIS is.
That’s why many top cryo-scientists now believe that the previous high end of sea level rise estimates are way too low. We could be headed toward at least four to six feet of rise this century — or more — followed by as much as a foot per decade after that. A 2013 NOAA study found that under what was then a high projection for sea level rise, the New Jersey shore from Atlantic City south would see Sandy-level storm surges almost every year by mid-century.
So replenishment is a losing battle, and it’s becoming more and more expensive — even as more and places are losing their beaches. We’re going to stop some time in the next few decades. But right now, we’re stuck in a classic Ponzi scheme, as the recent study explains:
As humans alter physical coastal dynamics by temporarily reversing erosion, they influence real estate markets and, in turn, future beach management decisions. Property values influence nourishment, nourishment influences beach width, and beach width feeds back on property values. In this way, human-occupied coastlines are strongly coupled systems, and policies that influence shoreline stabilization efforts become intrinsic drivers of economic value in the coastal zone.
We replenish sand on eroding beaches, increasing the value of coastal property, which leads to more sand dumping. The true extent — and ultimate victim — of this Ponzi scheme was made clear in a sobering chart from Reuters:
The Ponzi scheme has created a trillion-dollar bubble that American taxpayers are on the hook for. Increasingly, government officials and coastal property homeowners are either denying reality or hoping they aren’t around when the whole thing collapses, as all Ponzi schemes must.
Après nous, le Déluge.