Some Economics of Sea Level Rise in North Carolina John C. - PowerPoint PPT Presentation

Some Economics of Sea Level Rise in North Carolina John C. Whitehead Department of Economics Appalachian State University Boone, North Carolina 28608 (828) 262-6121 whiteheadjc@appstate.edu

SLR in NC � Approximately 5900 km 2 of coastal land is vulnerable to a 1.1-m rise in sea level projected for the year 2100

Barrier island vulnerability to SLR

South Nags Head, 2007

SLR Research and Dialogue in NC 9th most downloaded OCM article on September 16, 2009! �

Purpose � Synthesize the results of three decades of research and the development of coastal management policies � Identify the factors responsible for opening new policy ‘windows’ that address SLR � Research and policy progress in NC continue to provide a model for other regions

Table 1. Some of the issues Research/Policy Sector Issues being addressed (examples) Inundation modeling Physical Erosion and setbacks Shoreline hardening implications Groundwater hydrology modeling Ecological Forest retreat Marsh loss and migration Habitat loss or creation Socio-Economic Land-use planning and zoning Insurance coverage Effects on tourism and property values Implications of policy options Adaptation and mitigation

Some economic background � NC’s coast has relatively low population density � Population growth and second home development have increased demand for coastal housing � Property values have increased rapidly � $43 billion dollars of property in three most populous coastal counties

More economic background � The commercial fishing industry has been overshadowed by development and tourism � Coastal tourism accounts for approximately $2.6 billion year � The counties most vulnerable to SLR are the State's poorest and among the poorest in the US

Coastal Management in NC NC prohibits seawalls and � shoreline hardening Beach nourishment is � encouraged by both the Coastal Resources Commission Relocation of structures � threatened by erosion is sometimes the best available remedy

“Coastal regulators to study terminal groins” “The structure at the east end of Fort Macon State Park on Bogue Banks is one of two ‘terminal groins’ in the state.”

Economic effects of SLR in NC � Lost property values � Lost recreation and tourism values � Etc. � [A range of modest assumptions for sea- level rise, not best- case or worst-case scenarios]

Co-Authors � Ben Poulter, Swiss Federal Research Institute � Okmyung “Paul” Bin, East Carolina University � Chris Dumas, UNC Wilmington

http://econ.appstate.edu/climate

Coastal Recreation and Tourism

http://EconPapers.repec.org/RePEc:apl:wpaper:09-11

Study Beaches

Benefits vs. Impacts $ Quantity = number of trips � Price = travel + time costs � = c*d + γ w(d/mph) � Benefits Price Demand Impacts Quantity

Change in benefits with narrow beach $ Price D D’

Site Selection Model Brunswick New Onslow- Carteret Hanover Pender . . . . . . . . . . . . 5 Sites 3 Sites 4 Sites 5 Sites

Choose site to maximize utility ( v ) = α × + β × v price width j ij j

Site Selection Models Variable Impact Travel Cost Negative Beach Width Positive Salinity Negative Beach Access Negative State Park Negative Parking Spaces Positive Beach Length Negative

Trip Frequency Models Day Day/Overnight Children Positive White Positive Income Positive Positive IV Positive Positive

Average Beach Width 140 120 100 80 60 40 20 0 Current 2030 2080

Recreation Demand Model: Simulation Brunswick New Onslow-Pender Carteret Hanover . . . . . . . . . . . . 5 > Sites 3> Sites 4 >Sites 5 >Sites = α × + β × 2030 , 2080 v price width j ij j

Trip Intensity Model: Simulation Beach Trips 2080 Now 2030 Utility

Annual Lost Recreation Value ($millions) 700 600 500 400 300 200 100 0 2030 2080 Day (constant) Day/Overnight (constant) Day (+) Day/Overnight (+)

Present Value Lost Recreation Value ($billions) 30 25 20 15 10 5 0 0% 2% 7% Constant Population Increasing Population

http://econpapers.repec.org/RePEc:apl:wpaper:08-09

Fishing Sites: 22 piers, 28 beaches

Recreation Demand Model Northern Beach Southern Pier Northern Pier Southern Beach . . . . . . . . . . . . 19 Sites 9 Sites 8 Sites 14 Sites

Table 4. Nested RUM Mean Coeff. t-ratio Travel Cost 198 -0.025 -31 Catch rate per hour 0.62 0.103 3.4 Beach Width 54 0.0075 26 IV 0.40 24 McFadden’s R 2 0.10 Trips 3604 Sites 50

Willingness-to-pay per trip Additional fish caught and kept $4.04 10 meters of beach $2.97

Trip Intensity Model Days Fished Slope = 0.31 3.51 2080 Now 2030 Utility

Beach Widths Site Name 2005 2030 2080 Oregon Inlet South 27.17 -4.34 -9.59 Cape Point 46.88 15.37 10.12 Hatteras Inlet 39.11 7.6 2.34 etc

Present Value of Recreation Value ($2005 millions: 2007-2080) Beach Width Beach Width and Trips $2,000 $1,800 $1,600 $1,400 $1,200 $1,000 $800 $600 $400 $200 $0 Constant (2%) Increasing Constant (7%) Increasing (2%) (7%)

Coastal Real Estate

http://econpapers.repec.org/RePEc:apl:wpaper:09-24

Hedonic Pricing Housing Price Rent Gradient Ocean Distance from Ocean View

Effect of sea level rise Housing Price R 2 R 1 Ocean Distance from Ocean View

Study Area

GIS Real Estate Data

Hedonic price function (Dare Co.) Log of distance to shoreline -0.062 Number of bedrooms 0.22 Number of bedrooms Ocean front (=1) 0.695 squared -0.005 Sound front (=1) 0.3 Air conditioning (=1) 0.149 Lot size measured in acres 0.22 Multistory (=1) 0.166 Lot size squared -0.025 Hardwood floor (=1) 0.144 Age of house -0.004 Elevation squared -0.00011 • Constant is included

Year Scenario SLR (in meters) 2030 Low 0.11 2030 Mid 0.16 2030 High 0.21 2080 Low 0.26 2080 Mid 0.46 2080 High 0.81

Inundation Loss of Dare County Properties (Numbers, n=25,232) 4,000 3,500 3,000 2,500 Low 2,000 Mid 1,500 High 1,000 500 0 2030 2080

Inundation Loss of Dare County Properties ($millions, r=2%) $1,200 $1,000 $800 Low $600 Mid High $400 $200 $0 2030 2080

Impacts on Coastal Property Value � The value of property at risk to sea-level rise in four counties over the next 75 years � $6.9 billion � Northern counties more vulnerable than the southern � Dare: 2% to 12% of the total property value

Summary � Over the next 75 years: � Lost recreational and tourism benefits total $3.9 billion � The value of property at risk to sea-level rise in four counties is $6.9 billion

A policy window is open in NC � NC established a Legislative Commission on Global Climate Change � NC’s Coastal Resources Commission has actively begun discussions of SLR

A policy window is open in NC � Research continues on the effects of SLR and ways to address them � Scientists are focusing on making their research most useful to policymakers � Nonprofit and research institutions have committed to encouraging action on adapting to SLR impacts

Questions?