Climate Change Bailout Money

As the consequences of climate change become more severe in the United States, we must prepare ourselves to answer the questions, who receives federal aid and how much?

When Hurricane Katrina struck New Orleans, Congress moved quickly to appropriate emergency relief funds. The same scenario followed – only a bit more delayed – when Sandy hit New Jersey and New York. But what happens when sea-level rise and extreme weather events begin to affect every community in the United States at more or less the exact same time?

Simply, there will not be enough federal money to protect every community from the threats of climate change. We'll need to decide who gets bailed out and who is left to fend for themselves.

So far, it appears that the federal government may once again take a too big to fail approach. Funds will go where they have the capacity to help as many people as possible. Generally, this means that larger cities and towns may receive a greater share of available aid dollars.

Norfolk, Virginia is the first urban area in the United States to be substantially and permanently impacted by rising sea levels. Normal tides are now a foot and a half higher than they were a century ago, and the city is second only to New Orleans in terms of population affected by sea level rise, according to the National Oceanic and Atmospheric Administration. In 2012, the city finalized an action plan detailing its efforts to protect itself against rising waters. The plan calls for building flood gates and bulkheads, raising roadways, and redesigning the city’s storm water system. The estimated price tag? More than $1 billion. Norfolk will rely on the Commonwealth of Virginia for some of that cost, but much of it will need to come from the federal government. That’s a prospect that isn’t too promising for city leaders who worry about having to compete with cities like New York and Boston for limited resources.

In New York, where federal funds continue to be spent repairing the damage from Sandy, short and long-range plans for dealing with climate change are under consideration. Like most other eastern coastal cities, New York faces the threats of rising tides and stronger storms. A recent simulation estimated the city’s average annual flood losses from storms at $174 million, while extreme storms caused estimated losses reaching $25.4 billion. Preventing these losses, which requires building massive sea barriers, is not cheap. In fact, it’s a cost that New York has for the moment determined that it cannot afford. Instead, the city – again with the help of federal funds – has opted for a “hybrid” approach that includes making smaller infrastructure improvements to keep damage to an acceptable minimum.

So, if larger cities are struggling to pay for climate change preparations, is there any money available for smaller communities? In North Carolina’s Outer Banks, the consequences of climate change are already reality. Sea level rise has begun to strip the area of its economic lifeline – its beaches. But among locals, there isn’t much optimism about saving what’s left. Instead, residents will hold out as long as they can remain before they’re forced to abandon. These relatively unpopulated coastal stretches just cannot justify the massive expenditures it would take to stave off the effects of climate change, especially when they’re competing with more populous areas.

Largely, this “too big to fail” approach makes sense. There are not enough resources to fully protect every community from climate change, so it makes sense to spend those dollars where they stretch the farthest. This is in cities and bigger towns.

But this strategy creates at least one unintended consequence. It incentivizes - or at least fails to disincentivize - continuing to build in larger vulnerable communities without accounting for the risks of climate change.

Consider Miami, which is also among the US cities projected to be most affected by climate change. Miami sits only a few feet above sea level at its highest elevations and the porous limestone that sits beneath it makes the city and its water supply highly vulnerable to rising water. In addition, the city is located in the Hurricane Alley corridor. Within the lifetimes of most living Miamians, the city faced near destruction from Hurricane Andrew. The likelihood of a similar storm hitting the city is made more likely by climate change. For many South Florida homes, the land upon which they sit will be underwater within the duration of a 30-year mortgage. And yet, new construction in vulnerable areas continues at a rapid pace.

Only a few years removed from the housing market crash, cranes once again crowd the Miami skyline. In Downtown Miami, fourteen condo towers are under construction that will add 4,000 new units to the city center. An additional 13,500 units are in the pipeline, and all of this is on top of the 22,000 units that were built during the last building cycle. In all, Miami’s population has ballooned over the past decade and the pace of growth has not yet slowed. Yet, this impressive transformation is taking place almost entirely in an area that in all likelihood could be under water by the end of the century.

Miami may likely receive the federal aid that it needs to mitigate – to the extent possible – the effects of climate change. Although, it is not yet clear just how effective such measures can truly be. In the meantime, however, development continues with little or no attention paid to the future challenges. Every new unit added to downtown Miami is, in effect, a unit that will need to be bailed out – both literally and figuratively – over the coming decades. But this growth – as questionable as it may be – is precisely what may help secure a greater share of federal money to aid infrastructure improvements in preparation for climate change.

Miami is not alone in this regard. Across the United States, population growth in coastal cities has outpaced just about everywhere else, and low-lying waterfront property continues to be among the most desirable real estate in nearly every metropolitan area. The consequences of climate change will unfold slowly, and in the meantime we’ll likely continue to see significant growth in exactly the areas that we know to be most at risk. That’s not to say that we should stop developing those areas altogether. On the contrary, building densely in city centers – even the city centers of vulnerable cities – may be among the best ways to mitigate the future worsening of climate change predictions.

But we should still recognize the landscape of incentives that exists. Local elected officials lack at least one significant incentive to address climate change; the timeline for climate change’s worst consequences is still far longer than the timeline of an election cycle. Mitigating climate change arguably slows economic growth, a chief election cycle concern. Meanwhile, that economic growth will likely garner those same cities greater federal funding down the road to address the very problems that were ignored and even partially created by the new developments. On the other side, the federal government has minimal recourse (save for a massive transportation treasure chest that it thus far refuses to use) to forcefully direct new development to account for future climate change risks. As a result, the federal government may likely end up spending even greater amounts to bail out these cities in the future.

But the question still remains, which cities will receive federal aid? In a too big to fail funding environment, the answer to that question will depend on three independent and unsettled variables: how much funding will be needed; how much funding will be available; and in which cities will aid dollars impact the most people. This last variable will largely hinge on growth patterns over the next several decades. As much as a half-century or more remains before the vast majority cities begin to truly feel the pains of climate change. If the last half-century is any indication, the largest cities and towns of the future may be very different from the largest cities and towns of the present. Our decision moving forward is whether, with climate change in mind, to guide future growth to less vulnerable areas or to risk paying more later to salvage growth in areas that may be under water.

Photo Credit: Climate Change and Federal Money/shutterstock