Growing Returns

Selected tag(s): flooding

Hurricane season is here again. And finally, leaders are addressing multiple flood risks.

Every year hurricanes present a variety of threats to communities along the Atlantic and Gulf of Mexico coasts. And these risks aren’t just from storm surge.

Harvey and Ida showed us the effect of heavy rainfall, while Hurricane Florence demonstrated how rivers can overflow into homes and businesses. Meanwhile, climate change is impacting sea level rise, which increases sunny day flooding and the trauma caused from storm events.

Flooding doesn’t just impact coastlines, it impacts entire communities both inland and by the water. It hinders parents’ ability to bring their children to school and it limits patients’ access to vital healthcare and medical services. Not to mention, flooding has inequitable impacts on the wealth, health and wellbeing of millions of families.

flooding from hurricane

As we enter into the 2023 hurricane season, we’re reminded of the urgent need to implement natural disaster mitigation strategies that address comprehensive flood and storm risks. Acting before the next storm strikes means protecting both communities and ecosystems, in addition to saving nearly six times the cost spent on disaster recovery.

The good news? Over the past year, leaders have responded to our call to act – a call that was supported by more than a hundred organizations around the country. Here are two major ways their efforts can prepare us for the next hurricane: Read More »

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New research shows the potential consequences of unpriced flood risk in US housing markets

No region of the US is unaffected by the impacts of climate change. From recent flooding in California to impending sea level rise along the East coast, the increased risk of climate disasters has made every community more vulnerable.

New research published in Nature Climate Change led by EDF economists finds that increasing flood risk due to climate change pose threats to the stability of the US housing market. Published with researchers from First Street Foundation, Resources for the Future, the Federal Reserve, and several academic institutions, our research revealed that the real estate located in flood zones is overvalued by US$121–US$237 billion due to unpriced climate risk.

Growing flood risk—and a growing bubble in the housing market

pricebubblegraphic

Currently, over 14.6 million properties in the United States face at least a 1% annual probability of flooding, with expected annual damages to residential properties exceeding US$32 billion. The increasing frequency and severity of flooding under climate change is predicted to increase the number of properties exposed to flooding by 11% and average annual losses by at least 26% by 2050.

The increasing risk and cost of flooding due to climate change has led to growing concerns that housing markets are mispricing these risks, thus causing a real estate bubble to develop.

Supported by a grant from the National Science Foundation’s Megalopolitan Coastal Transformation Hub, the study is the first-ever national-scale assessment of climate risk to property values, using the property-specific, climate-adjusted First Street Foundation flood model. To do this, we evaluated the extent to which property values already account for the costs of flooding. We then compared those price discounts with property prices that fully capture expected damages from flooding over the next 30 years.

We found a nearly $200 billion dollar bubble.

The cascading and inequitable impacts of unpriced flood risk

Accurately pricing the costs of flood in home values is needed to support climate adaptation and to remove perverse incentives for development in floodplains. However, doing so could have negative financial impacts on households, communities, and municipalities. In the event that property values fully account for exposure to climate risk, our results raise concern that:

  1. Low-income communities are particularly vulnerable. The extent to which flood risk is not priced into housing values varies based on neighborhood and state characteristics, with low-income households at a higher risk of losing home equity . Such inequities have the potential to exacerbate wealth gaps in the US.
  2. Coastal housing markets are particularly vulnerable. In general, we find that 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. In particular, properties in Florida are overvalued by more than US$50 billion.
  3. Municipalities that are heavily reliant on property taxes for revenue could experience budgetary shortfalls if housing prices are corrected for flood risk. Cities and towns concentrated in coastal counties, as well as inland areas in northern New England, eastern Tennessee, central Texas, Wisconsin, Idaho and Montana, are particularly vulnerable to losing revenues in the event of a pricing correction. In these areas, local governments may need to adapt their fiscal structure in order to continue to provide essential public goods and services.

We need efficient and effective climate change policies

The cost of unrealized flood risk in the US real estate market is an increasing threat to economic stability for households, communities and municipalities. Despite clear need for improving flood risk communication via updated flood maps, broadening flood risk disclosure laws at the state and federal level, and increasing investment in flood risk reduction, the realization of these risks will largely depend on policy choices that influence the distribution of flood-related costs in society. In effect, these policy choices will require decision-makers to grapple with moral questions about who should bear the costs of climate-related disasters.

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Building climate resilience requires a whole-of-government approach. Here’s how Louisiana is making it happen.

As communities in southwest Florida, Puerto Rico and elsewhere in the Caribbean struggle to recover from the damages of an active hurricane season, efficient, proactive resilience solutions have never been more important.

Louisiana continues to be a world leader in the planning and implementation of coastal resilience. Louisiana will release the fourth iteration of its Coastal Master Plan in early 2023, which provides the most science-based and publicly informed plan in the nation. Since the first plan, $21.4 billion has been invested in flood resilience infrastructure – focused on restoration of coastal ecosystems that provide essential flood risk benefits and grey infrastructure such as levees and seawalls. Other state agencies have also invested billions in rebuilding their infrastructure, such as schools, hospitals and prisons.

flooded hospital

Flooded hospital in Louisiana after a storm.

However, flood resilience is not just about infrastructure but also the ability of government agencies to maintain programs and services their constituents rely upon, from trash collection to food assistance to healthcare. Louisiana is the first to take a step toward a whole-of-government approach to ensure communities have access to the essential services they need to rebuild and thrive in the face of future flood risks.

Read More »

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5 ways federal policymakers can bring equity into flood risk reduction

Flooding remains the costliest, most deadly natural disaster in the U.S., causing more than $1 trillion in damages since 1980.

As climate change continues to fuel more intense hurricanes, sea level rise and heavier rain events, more Americans are at risk from flooding than ever before. And federal resources to protect communities from flooding are not provided to all communities equitably.

This gap in protection is a direct result of unintentional, but consequential flaws in the current cost-benefit analyses that agencies like the U.S. Army Corps of Engineers (Corps) and the Federal Emergency Management Agency (FEMA) use for flood protection projects.

Here are a few ways policymakers and coastal planners can help adjust cost-benefit analyses to expand access to flood protection and achieve more equitable results.

Read More »

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4 strategies for policymakers to get more natural infrastructure in the ground, fast

Climate change is fueling increased flood risk across our nation’s coastal regions and floodplains. 

States and local communities are turning to natural infrastructure as a key solution to build long-term flood resilience. Natural and nature-based features like wetlands, dunes and reefs offer multiple protective benefits — from absorbing stormwater, to minimizing the shock of storm surge to reducing flood severity. 

However, identifying funding for natural infrastructure projects is not always straightforward.  

Read More »

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4 ways North Carolina’s Legislature can build lasting flood resilience

As North Carolina continues to recover from a string of flooding and storm disasters, legislative leaders have recognized the opportunity for the state to not just recover from recent storms but to rebuild better before the next disaster.

This week, Environmental Defense Fund released a white paper [PDF] recommending four specific policy actions that would better protect residents and businesses from more severe flooding, create jobs and increase climate resilience.   

These four policies will also help the state better compete for federal funding, build capacity within communities and equitably align solutions for those who are disproportionately impacted by disasters.   Read More »

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Federal Reserve warns of financial risks from climate change. Agricultural banks must act fast.

Climate change poses a multitude of financial risks and financial leaders are increasingly calling for the measurement, disclosure and mitigation of these risks.

The Federal Reserve recently highlighted climate change in its annual financial stability report, warning that climate-driven weather events could cause price instability and other significant financial system vulnerabilities. The Fed’s report adds momentum to a growing wave of attention being paid to climate-related financial risk. Read More »

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Financial leaders release climate risk report calling for agricultural resilience

A report released today by a subcommittee of the U.S. Commodity Futures Trading Commission, Managing Climate Risk in the U.S. Financial System, examines the threat that increasingly extreme and volatile weather poses to the stability of financial markets, including U.S. agricultural markets. Representatives from EDF served on the 35-member panel.

The report found climate risks pose a wide range of threats to U.S. agriculture — including heat stress on farmworkers, livestock and crops, soil and water quality degradation, more frequent supply chain disruptions and productivity declines. Read More »

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Congress is advancing bipartisan climate resilience policies in 3 key ways

Congressional leaders across both parties are taking action to build climate resilience, and for good reason.

Natural disasters and extreme weather know no political affiliations or geographic boundaries, and are impacting all Americans with greater severity. Our country desperately needs investments in infrastructure that can withstand these disasters, while also increasing public safety, lowering the cost of disaster recovery, and spurring job and economic growth. Read More »

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North Carolina’s Legislature moves toward greater flood protection and climate resilience

Update, July 1, 2020: North Carolina’s Senate and House unanimously passed HB 1087. We thank Rep. Bell, Rep. McGrady and Sen. Newton for their leadership in advancing this important piece of legislation. Gov. Cooper signed HB 1087 on July 1, 2020. EDF staff will be working with Division of Mitigation Services staff and stakeholders to develop the program. Read our statement in response here

Earlier this month, North Carolina released its first Climate Risk Assessment and Resilience Plan to prepare for more intense rain events and flooding. In particular, the plan emphasizes natural infrastructure as a means to reduce flooding and provide other benefits.

On the heels of the plan’s release, North Carolina’s General Assembly is expected to pass a bill that contains a measure to create a faster, more efficient path for investing in projects that reduce flooding, protecting downstream communities while also empowering the private sector to employ more North Carolinians.

Once passed, HB 1087 will go to Gov. Roy Cooper for his signature. If signed, the bill would not only help North Carolina implement natural infrastructure projects with greater urgency, but it would also create the nation’s first market for natural infrastructure projects to address flooding.

Read More »

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