Jul 16, 2020

The need for proactive programs to address wealth disparity from climate disasters

If humanity is evenly partially successful in combating climate change, estimates suggest average sea levels may still rise between 0.2 and 0.3 cm by 2050 and between 0.5 and 2.0 meters by 2100. Our actions today determine just how high average sea levels will rise through the end of the century and beyond, and what coastlines and coastal communities around the world may look like. That is a scary thought when coupled with the inertia of a global economy that keeps us barreling towards rising temperatures.

Bringing this down to a more personal level, what does this really mean for those of us living and working within those coastal communities or other areas disproportionately affected by climate change? What will happen to the property values of our homes and neighborhoods,entire cities, susceptible to frequent natural disaster over the next 30 years? What will happen to the livelihoods of the nearly 40% of Americans that currently live within coastal communities over the next 50-75 years?  

One very real risk over the long-term is that the climate crisis has the potential to perpetuate wealth disparity and result in more severe isolation along socioeconomic lines.

Certain low-lying coastal cities like New Orleans, Miami, New York and Boston are among the most vulnerable major cities in the U.S. to rising sea level, but risk the is spread far more broadly across the country. According to a 2018 report by the Union of Concerned Scientists (UCC), more than 300,000 coastal homes and 14,000 commercial properties around the country are at risk of chronic flooding by 2045, within the time span of a 30-year mortgage. By 2100, the UCC estimates that as many as 2.4 million homes and commercial properties worth more than $1 trillion could be at risk around the country.

As chronic flooding and severe natural disasters become increasingly common, it is not inconceivable for those with the financial means to begin flocking towards regions less affected. This is particularly the case when insurance and mortgage companies deny coverage or increase terms on properties within these high-risk corridors to compensate for risk, as we’ve seen done in the past. Crowding and regionalized real estate appreciation/depreciation may lead to homogenous cities with high barriers of entry while families that lack the means may be stuck with stranded assets in increasingly high-risk areas, uninsured,seeing their personal wealth, social services and economic prospects get a little bit smaller after each disaster season.

How can we avoid this? In addition to numerous local, state/federal and GSE-level programs that can and should be instituted, the private sector, and financial companies in particular, have an important role to play. A laddered loan structure (stay tuned!), for example, is just one way to create greater access to home ownership in climate-resilient regions among low-and moderate-income families. Affordable relocation housing might also be built for temporary stays while families get acclimated to new geographies.

While the extent of the effects of sea level rise are unknown, what is certain is that addressing these risks proactively and aggressively will be imperative to avoiding a future in which climate exacerbates income inequality beyond a reparable level.

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