There was a time a decade or two ago when society could have made a choice to write off our massive investment in a fossil fuel-based economy and begin a policy driven shift towards a cleaner renewable infrastructure that could have forestalled the worst effects of climate change. But the challenges of collective action, a lack of political courage, and the power of incumbent pecuniary interests to capture the levers of power meant we did not. The bill is now coming due.
That means that many of our great, low-lying coastal cities are what we call “stranded assets.” GreenBiz founder Joel Makower defines a stranded asset as “a financial term that describes something that has become obsolete or nonperforming well ahead of its useful life, and must be recorded on a company’s balance sheet as a loss of profit.” Makower was talking about Exxon and other companies that built their businesses on the combustion of climate changing fossil fuels, not cities. But the concept easily transfers from businesses built on carbon to cities threatened by carbon’s impact.
Consider Miami. An invaluable, irreplaceable cultural jewel that will be stranded, both figuratively and literally, by climate change.
How can an entire metropolis that encompasses the lives, culture, and wellbeing of millions be considered “nonperforming?” The physical installations, infrastructures, and architecture upon which Miami are founded were built on what we now can see as a flawed assumption. An assumption of permanence. That the sea’s surface would stay as it had for the entirety of human experience. That Atlantic hurricane season would send infrequent storms of knowable magnitude that we could prepare for and ride out. It was that perception of permanence and predictability that underlay urban planning and shaped of tens of thousands of investment decisions that fostered billions of dollars of wealth in Miami. As long as nothing disturbs that perception, value will continue to accrue on paper. But if the perception of permanence that underlies those expectations is undercut, market value will disappear. Value is in the eyes of the buyer… until its not.
Climate change in general, and sea level rise in particular, are hard for us to see. The tides that surround Miami are elevating at a rate of centimeters per year. It is a slow motion train wreck that will be measured in decades, not seconds. For now, Miami property buyers don’t see it. A 2017 survey found that the majority of property buyers (over two-thirds) don’t ask even their brokers about the implications of climate change and sea level rise on the properties they are buying.
But for those willing to look, the impacts of sea level rise are already evident. So-called “sunny day flooding”, (i.e tidal flooding or flooding that occurs without the rain) is already occurring predictably in many parts of Miami, inundating streets, blocking traffic, killing lawns, corroding infrastructure and cars, contaminating groundwater, and reversing sewage systems. As sea level rise worsens, the inescapable conclusion is that some point Miami will be inundated and unlivable. Absent a civil engineering miracle, the entire city will become a stranded asset that society will have to write off. And it’s not alone: Reuters estimates at least $1.4 trillion in property is sitting within 700 feet of the U.S. shoreline, but the number is much probably larger.
When the irrational exuberance about the value of coastal real estate pops and thousands of buyers collectively mark down those assets, it will make the housing bubble of ten years ago look like a small blip.
The consequences will reverberate through the economy, through society and through the political landscape. Depending on what Hurricane Irma does, we could get a sobering preview of what that will look like. We have already seen the devastation caused by Hurricane Harvey in Houston, a city that was also built on the flawed founding assumption of permanence. Houston’s city planners and businesses also ignored warnings as far back as 1996 that climate change would bring exactly the kind of disaster they city is currently suffering today. It’s hard to blame them. We’ve all ignored the warnings.
We can’t anymore. Business leaders and politicians need to begin wrapping their heads around the big idea that climate change may mean huge financial losses in the world’s great coastal metropolises.
Six months ago, the U.S. Army Corps of Engineers finished a $12 million project to rebuild some of Florida’s prettiest shoreline. About 220,000 cubic yards of sand was poured onto tourist-friendly stretches of world-famous Miami Beach, widening it to 230 feet. It’s part of a 42-year-old federal program designed to combat gradual erosion and ensure there’s a buffer between inland communities and the leading edge of tropical storms.
Scientists will tell you that beaches and their shoreline cousins—wetlands, mangroves, bays, and sounds—are always on the move. They live at the whim of tides, winds, rivers, and waves. There have always been lovely beaches, historically speaking, but they haven’t always been where the iconic Fontainbleau hotel now stands in Miami Beach. This geographic reality didn’t hit home until people laid down beach towels, put up resorts, and cut navigation inlets.
As Hurricane Irma careens into Miami Beach’s neighborhood, the recently completed project is emblematic of the increasingly expensive chasm between what beaches are supposed to be, and what vacationers and property-owners want them to be. And global warming is fast expanding that gulf.
It only becomes “erosion” when you want to keep something the way it is, according to Robert Young, director of the Program for the Study of Developed Shorelines at Western Carolina University. He and other experts call changing shorelines just “shoreline change,” because it’s never going to stop. Proponents of fighting nature, meanwhile, call battling erosion the more healthy sounding “beach nourishment.” The problem with beach nourishment though is that it gets consumed—sometimes quickly.
“It’s not uncommon for a beach nourishment project to disappear—very shortly after it was placed—in a big storm,” Young said. “This happens all the time.” Like last year, when Hurricane Matthew brushed away a $30 million restoration project in South Carolina that was completed in 2014, stripping sand away from a shoreline called—wait for it—Folly Beach.
Accelerating sea-level rise and intensifying storms are speeding up erosion
There’s a slow-burning tension inherent in local economies built on disappearing beaches. Hotels build near the sand so guests will stay. The Corps or local authorities rebuilds beaches to protect hotels and everything else behind and around them. “That is why the berm [Corps shorthand for dunes and beach] is there in the first place, for that catastrophic event,” said Laurel Reichold, project manager for the Miami-Dade County Beach Erosion Control and Hurricane Protection Project. “That’s what takes the brunt of the storm, so your infrastructure behind it doesn’t take that big a hit.”
This cycle, however, seals in a political dynamic that runs counter to nature, which has a tendency of winning in the end.
I know New Orleans will, and I’m a New Orleanian.
I have a feeling that the main discussions in the aftermath of both Houston and Miami will be centered on insurance – conversations that will carefully try to avoid any mention of climate change or sea level rise
They’ll try, but Insurance Companies are well onto the problem. Even if a New Orleans company has been singing La La La, their re-insuring premiums for flooding cover will be humungous, so they will try to pass that cost onto their customers, who 99% of the time won’t be able to afford it. Or sell their property and move inland. That’s what happens when assets strand.
Multiply that by millions of similar properties near coastlines all round the world, as realisation that it’s not a hoax dawns, property values plummet and A LOT of people are ruined.
And it’s not just properties 700ft from the sea, it’s 5, 10, 50ft or more ABOVE sea level. Here in Christchurch NZ the high tide mark on our Avon river is about 5 miles inland from the sea, half a mile from the CBD that is being franticly rebuilt after devastating earthquakes back in 2010-11….talk about short-sighted!
I grew up in New Orleans and still have family there. (I occasionally ask them if banks there are still tending 30-year mortgages.)
Lately, however, I’ve come to suspect that New Orleans–with its compressed soils and pre-existing levee/pump* systems–will outlast karst-based Miami, probably Norfolk and maybe even Houston.
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*Greatly expanded after Katrina, an expense government will be less and less willing to take on as coastal city losses continue to increase.
In a way, Houston is doubly vulnerable. It is a coastal city with inadequate flood planning. Also, its economy is still joined at the hip to fossil fuel energy companies. Triply vulnerable if you consider that its refineries pose additional risks to its people during extreme weather events.
Consider what we know about capitalism. Possibly, fossil fuels were always seen as assets, and coastal cities as liabilities, by the ‘Invisible Hand’ of the Market. We are stranding people, and not fuel. It definitely speaks to our economic priorities, over our moral ones. As Forrest Gumps mother put it, ‘Stupid IS as Stupid DOES’, we reveal who we are by how we behave, and not by our silvery words.
Your readers may find interesting this politico article about the Louisiana experience asking bayou residents to think about relocating. Quote: “Relocation is politically toxic; handled centrally… disruptive and interventionist, the kind of move that foments revolutions. But… Louisiana… is… beginning to acknowledge to residents that even their best efforts will not be enough—and is asking them to think about what comes next.” Further quote: ” ‘This is the first time that I can remember that a group came in and said it’s not going to be all right,’ said Jonathan Foret, sitting in…[his] 88-year-old home… once owned by the wealthy fur trader his grandfather trapped for in the southern marshes.”
http://www.politico.com/magazine/story/2017/09/01/harvey-texas-louisiana-floods-relocation-215565