Wednesday, October 14, 2015

How Sea Level Disaster Could Affect Municipal Finances

A new study published in the Proceedings of the Natural Academy of Sciences (PDF) estimates the threat of sea level rise to coastal U.S. cities and towns. More than 400 municipalities but most notably Miami, New Orleans, and Boston will have substantial populations below sea level as a result of carbon emissions from existing energy infrastructure. That is, pollution from factories and power plants that are already operating worldwide is enough to put these cities mostly underwater. Before 2050, barring an extreme change in global energy policy, carbon emissions will be sufficient to make it inevitable that these places fall below sea level. After carbon emissions occur, sea level rise is delayed by half a century or longer because of the time it takes land-based ice to melt, but the actual flooding is not gradual. Flooding is most likely to occur suddenly in a catastrophic event such as a hurricane or tsunami.

In New Orleans, no more than 2 percent of the current city by population will remain above sea level a century from now. Realistically, the remaining land will be more like 10 percent of the city, but only because of fill brought in at considerable expense to raise the ground surface and keep the city alive for tourists. Levees and sea walls are on the drawing board for New Orleans, but they will protect the city only temporarily. Inevitably one day one section of sea wall will fail, perhaps in high winds, earthquake, or war, resulting in damage to the rest of the wall and permanently submerging virtually the entire city.

Besides the direct harm caused by such flooding events, it is worth planning ahead for the financial disasters they could cause. To greatly simplify the situation, imagine a 2065 hurricane or blizzard that puts 15 percent of Boston underwater and causes extensive damage to an additional 15 percent of the city, so that with extended evacuations the population and workplace infrastructure is abruptly reduced by 25 percent. Would the remaining 75 percent of the city be financially strong enough to meet the city’s financial commitments and also rebuild as needed? And if not, would rising taxes force more people to move out of the city until eventually the entire city is abandoned, or worse, taken over by outlaws and warlords?

This is the scenario of a science fiction writer, of course, and it takes a combination of bad legal, financial, and land use policy combined with a natural disaster to make such a financial disaster possible. The reason it is worth thinking about is that policies egregious enough to create such a disaster are currently in place in the majority of U.S. coastal states. In Pennsylvania, to cite one example, if a widespread disaster drove a city into insolvency, current law does not provide any possibility for the city to ever recover. Meanwhile in North Carolina, the law prohibits authorities from considering known future sea level rise in land use planning. Bad laws like these are not easy to correct, but the saving grace is that we may have half a lifetime to make policy corrections before a catastrophic coastal city failure occurs.

Besides the obvious corrections in state laws, cities that may be subject to predictable disasters should not borrow as much as U.S. cities currently tend to borrow. It is the debt load that turns a physical disaster into a financial disaster for the rest of a city. Limits on city debts are hard to enforce, but this year’s Boston Olympics experience shows a reason to hope that political activists can deter cities from making large-scale financial mistakes that politicians alone are unable to avoid.