Climate Denial Crock of the Week

At a certain point, we stop subsidizing people who live in areas of unsustainable climate risks.

Nature – Unpriced climate risk and the potential consequences of overvaluation in US housing markets – February 2023:

Climate change impacts threaten the stability of the US housing market. In response to growing concerns that increasing costs of flooding are not fully captured in property values, we quantify the magnitude of unpriced flood risk in the housing market by comparing the empirical and economically efficient prices for properties at risk. We find that residential properties exposed to flood risk are overvalued by US$121–US$237 billion, depending on the discount rate. In general, highly overvalued properties are concentrated in counties along the coast with no flood risk disclosure laws and where there is less concern about climate change. Low-income households are at greater risk of losing home equity from price deflation, and municipalities that are heavily reliant on property taxes for revenue are vulnerable to budgetary shortfalls. The consequences of these financial risks will depend on policy choices that influence who bears the costs of climate change.

Wall Street Journal:

CEDAR RAPIDS, Iowa—Officials in this city in eastern Iowa have long sought to build a system of levees and walls to prevent the Cedar River from flooding its banks and soaking homes and businesses. 

But to construct the more than $550 million flood-control system, Cedar Rapids officials say they must seize the land of some 20 homeowners who live in a low-income area along the riverfront. 

“Unfortunately,” said Cedar Rapids Mayor Tiffany O’Donnell, there are families “that are paying the price for the safety of the entire city.”

Proposed after a 2008 flood temporarily displaced 10,000 people in the city of 136,000, the project is an example of the challenges municipal leaders can face as they seek to insulate their residents from natural disasters, a threat made more urgent by climate change, experts in flood buyouts say.

The frequency of floods, fires and storms has led some to say that entire communities need to be relocated, in some instances. But even dislocation on a smaller scale poses significant challenges. “No one has figured out how to actually make this work,” said John Lovett, a law professor at Loyola University New Orleans who has written about the use of buyouts and eminent domain after disasters. 

City and state officials generally have broad authority to take land if it is for public use—a term interpreted with deference to the government, legal experts say—and if they compensate landowners for it.

In Cedar Rapids, the concerns about this process, known as eminent domain, have been magnified. Many of the affected homeowners see the proceedings as a land grab that would be used not exclusively for flood protection, but to beautify a city where home prices have risen markedly in recent years. Their houses are in a historically working-class neighborhood called Time Check, which was named for the postdated pay stubs its residents were once given when the railroads they worked for were short of cash. 

“They have a vision,” said Ajai Dittmar, 51 years old, who grew up in Time Check, “and we’re not part of it.”

The dispute comes as cities in Iowa and other states along the Mississippi River are preparing for spring flooding that is expected to be worse than normal because of heavy snowfall this past winter.

Numerous towns in Iowa flooded in 2019, after hundreds of miles of levees were compromised there and in neighboring states. Downtown Davenport, some 75 miles southeast of Cedar Rapids, was submerged with floodwaters after a temporary flood barrier failed. 

“We’re seeing these 1-in-100 or 1-in-500-year events happening more and more frequently,” said Larry Weber, a University of Iowa professor who helped establish the Iowa Flood Center. 

Local officials throughout the country typically build physical infrastructure such as levees and dams to manage the risk of floods, or incorporate natural barriers that have become more common in recent years: ponds, terraces and vegetation that can absorb or hold water.

Cedar Rapids’ flood-control plan includes 38,000 feet of levees and removable and permanent flood walls and gates along the river. The Time Check neighborhood would be razed and turned into a greenway with trails that could be flooded. 

Officials with the city, the second-largest in Iowa, say they are proud of the project and their ability to blend flood control with urban design. Archways that welcome drivers to different neighborhoods, for example, hide flood gates that can be rolled out. The city wouldn’t be able to get permits for the flood-control system if homes were allowed to stay in the Time Check neighborhood, the officials said. 

“We had an opportunity to really reimagine what we wanted to look like after that devastation,” Ms. O’Donnell said.

Flood protection affects the region’s economy: Quaker Oats, which was acquired by PepsiCoInc. in 2001, has a facility along the Cedar River. Time Check residents can tell what is baking by the sweet smell that wafts from the facility. Agribusiness company Cargill Inc. has four facilities in the city, as well.

Some are unmoved by the plight of the affected residents. 

Al Pierson, who lives and owns a flower shop in the area, said properties on the West side of the river need flood protection, and the neighborhood can’t be redeveloped until the flood-control system is in place. The affected homeowners declined buyouts over the years and “need to move on,” he said. The city has relied on voluntary buyouts until now in an effort to give residents time to adjust, they said.

“Their neighborhood is gone,” said Mr. Pierson, who leads a local neighborhood association. “There’s no bringing it back.”

Scientific American:

The U.S. real estate market fails to account for flood risk because many homebuyers deny climate change and government practices leave homeowners unaware of the potential dangers of inundation, according to the paper in Nature Climate Change.

The study, which builds on previous research about climate change and inflated housing prices, points to shortcomings in public policy, including federal flood maps that fail to identify millions of flood-prone properties, the absence of state laws requiring home sellers to disclose flood risk and underpriced federal flood insurance.

The lack of information combined with skepticism about climate change leads homebuyers to pay inflated prices that don’t account for the costs of flood insurance or flood repairs.

“The market is not capturing all these future losses projected to impact these properties right now,” said Carolyn Kousky, a study author and associate vice president for economics and policy at the Environmental Defense Fund. “At some point, there needs to be a market correction.”

Kousky added that “if the market corrects itself and sees decreases in values, homeowners are going to experience that as a loss.”

The study finds that U.S. properties are overvalued by between $121 billion and $237 billion — a much higher figure than previous estimates. Home prices are inflated in almost every county in the U.S.

Some of the highest rates of overvaluation are in counties in Kentucky and West Virginia, the study shows.