ULI recently published a new research report, Surge: Coastal Resilience and Real Estate, which introduces the challenges associated with coastal hazards such as sea level rise, coastal storms, flooding, erosion, and subsidence, and provides best practices for real estate and land use professionals, as well as public officials, to address them. Here are a few compelling highlights:
The Business Case
A significant concentration of economic power lies within the coastal regions of the world, particularly within urban areas. Sixty percent of the world’s cities with populations over 5 million are located within 62 miles (100 km) of the coast, including 12 of the world’s 16 cities that have populations over 10 million.222 In the United States alone, coastal states contribute 83.7 percent of the national gross domestic product. The Business Case for Investing in Coastal Resilience With so much global economic activity coming from coastal areas, investing in coastal resilience to protect these areas, their people, and their assets is of great importance
Cost of Prevention Versus Cost of Recovery
The National Institute of Building Sciences Multi-Hazard Mitigation Council articulated the economic rationale behind this strategy in a cost/benefit analysis of natural hazard mitigation measures, building code updates, building retrofits, and investment in utility and transportation infrastructure to withstand natural disasters. The analysis indicated broad economic benefits from such investments and found that, for every dollar spent on coastal hazard mitigation efforts, US$5 to US$10 are saved from reduced damage during disasters, lowered insurance premiums, and avoided costs of emergency response and recovery.
Modera Revere Beach in coastal Massachusetts, by Mill Creek Residential. In response to coastal flood risk identified during Mill Creek’s risk assessment, the company developed an innovative flood “pass-through” system (openings visible at the base of the building, detailed in the inset image) for water to flow under the building garage safely. Compared to traditional elevation on piles (an economically nonviable cost of $175,000 per unit), the pass-through cost only $3,000 per unit extra and maximized unit count.
Mill Creek Residential
Coastal Property Overvaluation and Increasing Coastal Risks
Many counties along the U.S. Gulf, Atlantic, and Pacific coasts are experiencing significant property overvaluation due to unrecognized flood risks. One study found that U.S. residential properties exposed to flood risk are overvalued by US$121 billion to US$237 billion. In some coastal counties, properties were overvalued by more than 10 percent on average. Highly overvalued properties are concentrated in counties along the coast that lack flood risk disclosure laws and where people are less concerned about climate change. Property owners are falsely comforted by out-of-date federal flood maps and government-subsidized flood insurance.
Risk Assessment and the Resilient Design Process
It is critically important to understand the local vulnerabilities of an area or site—before selecting specific adaptation strategies—to ensure the selected strategies effectively mitigate the identified impacts. The process involves the following steps:
Sea Level Rise
Global average sea level has risen 8 to 9 inches (21–24 cm) since 1880, and the rate of global sea level rise is accelerating.28 For most of the 20th century, the sea level rose at a rate of about 0.06 inches (1.4 mm) each year. However, between 2006 and 2015, this rate more than doubled to 0.14 inches (3.6 mm) per year.29,30 Global average sea level rise is accelerating due to ice sheet melt, glacier loss, and ocean thermal expansion caused by global warming.
Global warming refers to the Earth’s average temperature increasing, leading to changes in climate and weather patterns. By the year 2100, experts expect the average global sea level to be between 24 and 86.4 inches (0.6 to 2.2 m) higher than in 2000.32 The IPCC and the National Oceanic and Atmospheric Administration (NOAA) estimate that by 2050, the global sea level will rise by 9 to 12 inches (about 23–30 cm).33,34 This future increase is largely due to the greenhouse gases we have already emitted and continue to emit. However, predictions for sea level rise after 2050 are less certain because of the challenges of foreseeing how Earth’s natural response systems will react to ongoing warming and how effectively humans will reduce future emissions.
Commercial Mortgage-Backed Security Property Exposure to Storm Surge on the East and Gulf Coasts of the United States
According to Moody’s Climate on Demand tool, 2,733 commercial mortgage-backed securities properties are currently exposed to coastal storm surges on the East and Gulf coasts of the United States. By 2050, the cumulative average damage to these properties due to storm surge in a high emissions (RCP 8.5) scenario is expected to be about US$6.7 billion, which equates to an average damage of nearly US$2.5 million per property. For these properties exposed to sea level rise, 4 percent of them will have cumulative annualized damage rates (ADRs) of 25 percent or more by 2050, while 8 percent will have ADRs of 10–25 percent, and 6 percent will have ADRs of 5–10 percent. ADRs include the expected damage due to coastal storm surge per year as a ratio of total value, combining estimates of financial damage due to impacts on the building and its contents, and losses or increased costs from business interruptions. As these data focus only on storm surge, they do not factor in business interruptions or property damage that are due to high tide flooding or other impacts of sea level rise not associated with hurricanes. Thus, these damage estimates capture only a portion of the financial damage properties can expect from coastal hazards.
Coastal Storms
One of the most striking consequences of climate change is the changing pattern of coastal storms. Climate change is leading to more intense coastal storms, primarily as a result of warming temperatures and changing ocean currents.49,50 Coastal storms can bring with them extreme winds, precipitation, storm surges, and flooding and are known by many names: cyclones, typhoons, hurricanes, nor’easters, atmospheric rivers, and tropical depressions, to name a few. Coastal storms can cause extensive damage. The total damages from tropical cyclones globally have reached hundreds of billions of dollars annually. In the United States alone, hurricanes accounted for over US$1.3 trillion in damages from 1980 to 2023, with an average cost of US$22.8 billion per event. On average, around 80 to 90 named tropical cyclones form each year around the world.
ULI Developing Resilience Toolkit
The Risk Assessment and Resilient Design process presented here is based on the U.S. Climate Resilience Toolkit’s Steps to Resilience and is tailored to global real estate needs in the ULI Developing Resilience Toolkit.
Related reading:
After Surfside: New Regulations and Skyrocketing Insurance Premiums Strain Condo Owners
Resilient by Design: Time to Change Codes in Coastal Cities
