CIAO DATE: 11/2012
May 2012
Belfer Center for Science and International Affairs, Harvard University
Many sections of the U.S. coastline are severely eroding. The average long-term rate of shoreline loss along the New England and mid-Atlantic coasts is 1.6 feet per year, with much higher rates in areas such as southern Nantucket Island in Massachusetts (12 feet per year) and the southern portion of the Delmarva Peninsula in Maryland (9.5 feet per year). In Florida, some segments of beach lose as much as ten to twenty feet per year. Under current predictions of a 1.1 foot rise in average sea levels by the year 2100, these erosion rates will accelerate, and between 3,000 and 7,000 square miles of dry land could be lost. Although it is possible to protect coastal areas from shoreline loss—through installation of hardened features such as seawalls and groins, imposing set-back and minimum-height home construction requirements, and performing periodic nourishments to place new sand onto eroded beaches—the costs are substantial. For example, the Florida Department of Environmental Protection projects that 1.1 billion dollars would be needed between 2011 and 2015 for full implementation of the state’s strategic beach management plan. Surprisingly, given both the substantial costs of preventing coastal erosion and the serious risks posed by retreating shorelines and rising sea levels, there is little rigorous evidence on the benefits of wider beaches for coastal property owners. Existing studies suggest that the sale price of a coastal home increases between $70 and $8,000 per one foot increase in beach width. However, since cross-sectional hedonic property value regressions suffer from well-known theoretical and econometric problems, the interpretation of these estimates is not clear. Coefficients from hedonic regressions are biased when one of the housing attributes (such as beach width) varies over time. Furthermore, cross-sectional hedonic regressions are vulnerable to problems with omitted variable bias —as might be the case if higher quality houses are built along wider sections of beach.
Resource link: What are the Welfare Costs of Shoreline Loss? Housing Market Evidence from a Discontinuity Matching Design [PDF] - 1.8M