Is It Worth It to Save Oceanfront Development? Economists Wonder

Economists are coming up with new ways of predicting damage to oceanfront resorts, highways and homes and reassessing the wisdom of further coastal development.

An upcoming study by economists at University of California, Los Angeles; the University of California, Santa Barbara; and San Francisco State University modeled 15 miles of California beaches and found large differences in the costs and benefits of shoring up eroding coastlines.

Assuming a low-end estimate of 1 meter sea-level rise, a 100-year flood at San Francisco's Ocean Beach would cause $285 million in property damage, compared to $107 million in 2000.

At Venice Beach in Los Angeles, damages would rise from $10 million to $131 million. Damages from tourists choosing to spend their dollars elsewhere would also have outsize impact on Venice Beach; the popular stretch of boardwalk would lose up to $7 billion by 2100, compared to $385 million at Ocean Beach if sea levels rise 2 meters, the highest level the researchers analyzed.

Such results would inform policymakers, homeowners and insurers' decisions on what to do to protect their property: erect seawalls or other barriers, try beach "nourishment" (dumping sand to counteract erosion), or give up entirely and relocate.

To calculate the damages, the researchers took sea-level rise estimates developed by the Pacific Institute last year and applied them to U.S. Army Corps of Engineers "stage-damage curves," which estimate property damages at various levels of water.

Damage risks become untenable

The economists are also trying to quantify the value of ecological benefits like protecting endangered species, and even the benefit of a day at the beach.

"I might never go to Madagascar, but the fact that it's there makes me feel good," explained study co-author Aaron McGregor of UCLA.

The methods still have many weaknesses. Particular to California is the fact that assessed property values don't reflect true market values, thanks to a 1978 measure that capped property taxes at 1975 values plus inflation. The economists corrected for that by using county data on average square footage and number of bedrooms and bathrooms per land parcel, combined with cost-per-square-foot data compiled by the National Institute of Building Sciences.

The study assumed that building value is distributed equally over the land, which would mean that water reaching 30 percent of the land would result in damages to exactly 30 percent of the property value.

Still, the results make it clear that the risks of property damage will become economically untenable. By 2100, a sea level rise of 1.4 meters combined with erosion would cause $230 million worth of damage to the Ocean Beach coastline, according to McGregor's research.

McGregor thinks the modeling could supplant the type of economic analysis done by the Army Corps of Engineers to assess the relative cost of shoring up eroded coastline. It could also be more robust than a straight cost-benefit analysis, which ignores extreme events and storm surges in favor of mean sea-level rise.

"We believe our model is comprehensive but requires less resources" than the Army Corps model, which includes property values for every building, McGregor said. Next up may be testing the new model on a shoreline that the Army Corps has already studied, and comparing results.

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