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 km2 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) Physical Inundation modeling 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

• vershadowed 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

• ne 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 Impacts Benefits $ Price Demand

• Quantity = number of trips
• Price = travel + time costs
• = c*d + γw(d/mph)

Change in benefits with narrow beach

D $ Price D’

Site Selection Model

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

Choose site to maximize utility (v)

j ij j

width price v × + × = β α

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

20 40 60 80 100 120 140 Current 2030 2080

Recreation Demand Model: Simulation

. . . 4 >Sites 3> Sites Carteret . . . . . . . . . Onslow-Pender New Hanover Brunswick 5 > Sites 5 >Sites

2080 , 2030

j

width price v

ij j

× + × = β α

Trip Intensity Model: Simulation

Beach Trips Utility

Now 2030 2080

Annual Lost Recreation Value ($millions)

100 200 300 400 500 600 700 2030 2080 Day (constant) Day/Overnight (constant) Day (+) Day/Overnight (+)

Present Value Lost Recreation Value ($billions)

5 10 15 20 25 30 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

. . . 8 Sites 9 Sites Northern Beach . . . . . . . . . Southern Beach Northern Pier Southern Pier 19 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 R2 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 Utility

Now 2030 2080 3.51 Slope = 0.31

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)

$0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 $2,000 Constant (2%) Increasing (2%) Constant (7%) Increasing (7%) Beach Width Beach Width and Trips

Coastal Real Estate

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

Hedonic Pricing

Housing Price Distance from Ocean Ocean View Rent Gradient

Effect of sea level rise

Housing Price Distance from Ocean Ocean View R1 R2

Study Area

GIS Real Estate Data

Log of distance to shoreline

• 0.062

Number of bedrooms 0.22 Ocean front (=1) 0.695 Number of bedrooms 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

Hedonic price function (Dare Co.)

• 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)

500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 2030 2080 Low Mid High

Inundation Loss of Dare County Properties ($millions, r=2%)

$0 $200 $400 $600 $800 $1,000 $1,200 2030 2080 Low Mid High

Impacts on Coastal Property Value

The value of property at risk to

sea-level rise in four counties

• ver 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

• n 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?