Insurer Climate Risk Disclosure Survey: 2012 Findings and Recommendations

2012 was the warmest year on record in the Lower 48 states and the second most extreme weather year in U.S. history. This is not a coincidence. Extreme weather -- stronger, more damaging storms, unprecedented drought and heat in some regions and unprecedented rainfall and flooding in others -- are the predictable consequences of rising global temperatures.Eleven extreme weather events each caused at least a billion dollars in losses last year in the United States. A single event, Hurricane Sandy, caused more than $50 billion in economic losses. Insurance companies are on the hook for tens of billions of dollars in claims as a result of Sandy and other severe weather events. And American taxpayers are on the hook for tens of billions of dollars themselves, thanks to losses sustained by the National Flood Insurance Program as well as disaster relief spendingThis raises a fundamental question: Is the insurance industry prepared? Have insurers analyzed and measured their climate-related risk? Are they planning for life in a warmer world? These should be essential questions for insurance regulators in all 50 states to be asking, and some are

Enhancing Coastal Resilience: Perspectives on Valuing RI Coastal Lands

This paper discusses coastal resilience as an organizing framework for future policymaking, coastal planning, and insurance decisions, and explores the different perspectives of the value of ecosystems held by various stakeholders in Rhode Island’s coastal communities. A grounded theory approach was used in an effort to abstract general insights from the substantive but isolated areas of coastal management and economics. Special attention is given to the perspectives of municipal decision makers, the National Flood Insurance Program, natural economists, and real estate developers. We have (1) conducted a statistical analysis of environmental spending of RI towns, (2) identified key models for ecosystem services valuation, (3) researched the major threats to coastal ecosystems, and (4) explored how the coastal resilience theme might shape the future of the coast. Elements of the study rely on the formulation and testing of hypotheses. However, the analysis was primarily a demonstration of the inter-disciplinary emergent thinking that this paper proposes will provide solutions for coastal communities’ most pressing issues. The framing question is how social, personal, and environmental goals align when coastal resilience is enhanced, and how stakeholders can utilize these new decision-making tools to achieve increased communication and a more accurate understanding of the perceived value of ecosystem services

The influence of climate change on the value of coastal residential properties in South Africa

Abstract : In March 2007, the KwaZulu-Natal coast was hit by storm swells which severely damaged coastal properties. The economic loss was estimated to be more than R1 billion. Risk associated with the changing climate is on the increase and if the number of studies (nationally and globally) regarding this phenomenon are considered, there is a need to quantify this risk. This raises questions regarding property valuers’ knowledge, behaviour and attitudes regarding climate change and their impact on the well-established property valuation processes and procedures in South Africa. In national and global studies, a variety of concepts, unrelated to market value or a manipulated form of market value, are used to quantify economic loss. However, financial decisions regarding property, plant and equipment are made based on the concept of market value. This presents the question this study attempts to answer: How does the predicted rise in sea level and its ensuing risk affect property valuers’ behaviour in the coastal residential real estate market in Sedgefield, South Africa and how can property valuers quantify the climate risk? This study aimed to identify the knowledge, behaviour and attitudes of property valuers in a particular property market, on the southern Cape coast of South Africa, regarding the predicted rise in sea level. A mixed methods research approach by way of a two-stage sequential exploratory design, beginning with an initial phase of qualitative data collection and analysis, followed by a phase of quantitative data collection and analysis was followed. This provided the researcher with an opportunity to collect, analyse and incorporate qualitative and quantitative data in one study. The results was used to develop a model property valuers can use to determine a risk factor when they develop an opinion of the value of coastal residential properties. In this study a mixed methods approach was pursued. The southern Cape coast was chosen as two separate studies conducted in 1993 and 2010 identified it as the stretch of coastline along the South African coast most vulnerable to a rise in sea level.D.Phil. (Finance

Climate Ready Estuaries - COAST in Action: 2012 Projects from Maine and New Hampshire

In summer 2011 the US EPA’s Climate Ready Estuaries program awarded funds to the Casco Bay Estuary Partnership (CBEP) in Portland, Maine, and the Piscataqua Region Estuaries Partnership (PREP) in coastal New Hampshire, to further develop and use COAST (COastal Adaptation to Sea level rise Tool) in their sea level rise adaptation planning processes. The New England Environmental Finance Center worked with municipal staff, elected officials, and other stakeholders to select specific locations, vulnerable assets, and adaptation actions to model using COAST. The EFC then collected the appropriate base data layers, ran the COAST simulations, and provided visual, numeric, and presentation-based products in support of the planning processes underway in both locations. These products helped galvanize support for the adaptation planning efforts. Through facilitated meetings they also led to stakeholders identifying specific action steps and begin to determine how to implement them

Sea Level Rise, Homeownership, and Residential Real Estate Markets in South Florida

This article builds on a small but rapidly growing body of research that seeks to determine the impact of sea-level rise on the pricing of residential properties. Through a spatial hedonic regression analysis of real estate markets in two Florida counties (Miami–Dade and Pinellas), we assess the influence of different exposure levels on market discounts. Our article stands out in terms of its focus on two comparative case studies and its differentiation between properties that are primary homes versus nonprimary homes. We find that generally discounts are positively associated with exposure levels and overall Miami–Dade experiences higher discounts than Pinellas due to the former’s lower average elevations. We also observe different market behaviors of primary versus nonprimary home buyers and these are partially dependent on affluence. In Miami–Dade, price discounts are less for highly-priced properties purchased by nonprimary owners. We attribute this to different buying motives and risk tolerance of affluent nonprimary homeowners. We argue that nonprimary ownership, particularly in high-end waterfront residential real estate, is tempering gradual market adaptation to sea-level rise exposure risk, which could have detrimental longer-term consequences in terms of market volatility

FLOODING RISK AND HOUSING VALUES: AN ECONOMIC ASSESSMENT OF ENVIRONMENTAL HAZARD

Climate change, the ‘boom and bust’ cycles of rivers, and altered water resource management practice have caused significant changes in the spatial distribution of the risk of flooding. Hedonic pricing studies, predominantly for the US, have assessed the spatial incidence of risk and the associated implicit price of flooding risk. Using these implicit price estimates and their associated standard errors, we perform a meta-analysis and find that houses located in the 100-year floodplain have a –0.3 to –0.8% lower price. The actual occurrence of a flooding event or increased stringency in disclosure rules causes ex ante prices to differ from ex post prices, but these effects are small. The marginal willingness to pay for reduced risk exposure has increased over time, and it is slightly lower for areas with a higher per capita income. We show that obfuscating amenity effects and risk exposure associated with proximity to water causes systematic bias in the implicit price of flooding risk.Manufactured Housing; valuation, environmental risk, meta-analysis, hedonic pricing

Citizen Preferences for Marine Environmental Policy

The growing global population, combined with increased land use, has emphasized the demand for sustainable ocean management strategies. Among suggestions for these strategies is a closer examination of the visual impact that aquaculture sites may have on coastal homes, as well as perception and preferences on coastal issues including coastal hazards, impacts of development, and marine debris. Maine’s unique and extensive history, as well as geographic location makes it an ideal setting to study these vital coastal issues, as well as to assist decision makers with informed options for management and policy. This research explores various coastal usages and issues to determine what role visual impacts and perceptions may play on coastal communities in Maine. Empirical methods utilized include 1) viewshed analysis and semi-log hedonic pricing framework in order to capture information regarding impact that view of marine aquaculture may have on coastal home prices; and 2) various survey instruments such as frequencies, cross tabulation, factor analysis, and logistic regression to explore perceptions concerning ocean and coastal priority areas; to determine what housing, demographic, and social characteristics may be associated with different levels of awareness of policy-relevant knowledge; and to investigate the relationship between perception of and preference for Maine coastal and ocean issues. Results from our spatially fixed semi-log hedonic pricing model suggest that visibility of aquaculture may have mixed impacts on coastal housing markets depending on geographic region, as well as how view of aquaculture enters our models. For Casco Bay, visibility of aquaculture shows no statistically significant impacts in our base model and alternate model 2 and positive impacts in alternate model 1 (entering the model as an aquaculture view dummy indicator). Damariscotta also shows no statistically significant effects in base model and alternate model 2, while conveying positive effects on housing prices in alternate model 1. View of aquaculture conveys no statistically significant effects in Penobscot Bay in base model or alternate model 1, but conveys positive and significant effects in alternate model 2. Additionally, we find that omission of visibility may lead to omitted variable bias. These results also suggest that we may be missing additional indicators associated with aquaculture (noise, smell, etc.). The research completed from our models is a critical step towards the end objective to inform policy makers and stakeholders of social costs related to future site selection for sustainable marine aquaculture. Results from our survey data suggest that participating Maine coastal citizens who agreed or strongly agreed with the perceived statements regarding current ocean and coastal conditions prioritized these areas as outlined in the Maine Coastal Program. Additionally, certain situational factors such as trust in science, belief in climate change, and perception of ocean health may be important predictors of knowledge and preferences. Overall, we find that participants who have an awareness in the situational factors listed above are more likely to support coastal zone priority areas enacted by the Maine Coastal Plan that promote effective marine planning and protection

Preparing for climate change in three New England coastal communities: Lessons on motivations, approaches, and outcomes

This case study research investigated three coastal communities in New England engaged in climate change adaptation. The research goals were to (1) Identify and describe the factors that prompt communities to plan for climate change impacts, (2) To elucidate the types of approaches taken by communities in planning for climate change impacts, and (3) To identify outcomes that transpire from engaging in climate adaptation. The major factors prompting climate adaptation included experience with extreme weather events, local leadership on climate change, and access to technical assistance. Each adaptation process was largely stakeholder-driven. The approaches varied and included utilizing local stories and experiences, updating a traditional hazard mitigation planning framework, and using a technical modeling tool. Major enduring outcomes included increased capacity for adaptation and other local issues, new collaborations or strengthened partnerships, increased attention to existing vulnerabilities, and a foundation for iterative action on adaptation