Last week, at the One Planet Summit in Paris, the Global Covenant of Mayors for Climate & Energy and World Bank Group announced a new partnership that will provide technical and financial assistance to 150 cities all over the world. The $4.5-billion investment by the World Bank will finance sustainable initiatives and climate resilience programmes in these cities.
By developing bankable business plans, structuring public-private partnerships to crowd in private sector investment, monetizing increases in land values, and designing and implementing credit enhancement mechanisms to allow commercial financing to cities, the partnership will help countries leverage the private sector. To date, this partnership is the largest global alliance of cities committed to building urban climate change resilience.
“Cities are preparing today for the risks of climate change by increasing their resiliency and sustainability – and the World Bank’s financing will help them do more of this work,” said Michael R. Bloomberg, UN Secretary-General’s Special Envoy for Cities & Climate Change and Co-Chair of the Global Covenant of Mayors. “The fight against climate change is being led by cities and communities and it’s essential they have the funds to continue it.”
The lending will take place over the next three years under the umbrella of the World Bank’s City Resilience Program.
Cities are developing ever more inventive ways to finance projects that build climate change resilience. In the Belgian city of Ghent, citizens can directly contribute to climate adaptation initiatives thanks to a crowdfunding platform. Residents submit ideas for resilience projects and obtain co-funding from online donors to implement them. So far, two adaptation projects have received successful financial backing: one provides urban farming for residents of a social housing district while the other aims to transform stone facades into vertical gardens, to fight the urban heat-island effect.
Such initiatives may be part of a trend towards a diversification of funding streams to help kick start adaptation projects, according to a report by the European Environment Agency, Financing urban adaptation to climate change. The report analyses eleven cities’ financing strategies for adaptation, and shows identifies a range of strategies being employed to raise capital for climate resilience building.
As urban populations around the world continue to grow, cities require a huge amount of investment in new infrastructure. However, many cities are struggling to find sufficient capital to fund the adaptation initiatives at the levels required to protect their citizens from climate impacts such as extreme heat and flooding. While city officials recognise that adaptation measures provide good value for money in the long run, they challenge to raise capital remains.
The report’s authors draw three main conclusions from initiatives underway in European cities. First, it recommends identifying cross-sectoral funding derived from a range of sources. For instance, money allocated to water management and urban revitalisation projects can also be used to contribute to adaptation, as many such projects relate to climate-resilient infrastructure. Initial public investments, along with private sector funding, were also found to be a good way for municipalities to launch adaptation projects without imposing a burden on public budgets.
Secondly, the report highlights a need for capacity building of city government, planners and other stakeholders to help them identify new financing streams. City officers need to understand the available financial options and how to demonstrate adaptation projects’ creditworthiness. This remains challenging, as investors often look for direct, short-term financial returns – a fact that may explain why most adaptation measures are not financed through loans.
However, other initiatives are capitalising on the fact that investments in adaptation can save money by limiting the impact of climate-induced catastrophes. The nascent resilience bonds market for example provides a mechanism for borrowing that would allow disaster-prone cities to have the protection of insurance and benefit from lower premiums thanks to their investments in resilience. Concretely, those cities would be eligible to insurance savings (via coupon reductions) when undertaking climate resilient works for instance, as these would decrease the probability of severe climate damages.
Lastly, adaptation measures must be integrated into city development strategies and urban planning. This will increase financing partners’ confidence to make climate adaptation investments. Communicating that climate adaptation is a priority for city governments also helps to ensure active involvement of officials, planners and other decision makers. In Malmö, Sweden, city officials held workshops and meetings about the adaptation plans of the new harbour district. Engaging a stakeholder partnership process is a way to ensure that the final realisation of the urban development reflects the city’s vision and ensures broad ownership.
City decision makers are faced with a wide range of opportunities when it comes to climate adaptation finance, notwithstanding they face considerable challenges to understand and co-ordinate financial flows from such diverse channels. However with the right support, new inventive finance mechanisms can be harnessed to build the climate resilient cities of the future.
Recently, Acclimatise, Deltares, and 5Oceans received the assignment to support the Emirate of Dubai in the creation of a climate adaptation strategy. This challenging project is coordinated by the Environment Department of Dubai Municipality. Dubai is an active member of the global C40 City Network.
In a world where the risk of climate change is becoming more overwhelming, it is in Dubai’s interests to identify appropriate strategies to adapt to climate change to ensure the Emirate continues to thrive in the future. A climate adaptation strategy therefore forms part of the foundation for Dubai’s high standard in economic, social and environmental targets and aspirations.
The primary aim of the adaptation strategy is to prevent negative impacts on sectors by presenting a guideline and actions that diminish risks of climate change. Another important objective is to identify actions, with high feasibility, broad support and in synergy with the ambitions and goals of sectors (e.g. tourism, energy, water, infrastructure, industry, real estate, nature preservation etc.).
Cover photo by Tim Reckman (CC BY-SA 3.0): Skyline of Downtown Dubai with Burj Khalifa from a Helicopter.
“There is nothing like waves lapping at the foot of 14th Street to get people’s mindsets to shift about how we are living in cities, within a larger environmental context” explains Kate Orff, Founder of SCAPE Landscape Architecture, based in New York. The firm is unusual amongst architects as it focusses on building architecture from natural ecological systems.
It’s hard to imagine today, but Pearl Street in New York, is so called because it used to be paved with oyster shells. Such was the abundance of oysters in New York harbour, that they would be sold in street wagons as a curb-side snack. The oysters were over exploited and today the once huge oyster reef is non-existent. However, when Hurricane Sandy hit in 2012, causing an estimated US$75 billion in damage people started to ask serious questions about the city’s preparedness for coastal flooding and storm surges. It turns out that the vast oyster reef offered the city substantial protection, breaking up waves before they crashed on shore.
Today there are efforts to restore parts of the reef, as part of wider plans to increase the degree to which natural ecosystems contribute to urban resilience. In this video, Kate Orff, explains how her firm integrates natural systems and infrastructure to rehabilitate New York’s infamously polluted Gowanus Canal.
Cover photo: Oyster shuckers at work in 1912. New York was a world centre for Oysters. Public Domain.
By Anu Jogesh, Umamaheshwaran Rajasekar, Soumita Chakraborty
The recent spate of floods in India has rekindled conversation on the need for smart city development that explicitly builds in resilience in planning and decision-making.
Climate resilience has failed to find mention in a cross-section of smart city proposals in India, though a number these urban centres are already engaged in projects aimed at assessing climate impacts and building resilience. It has been over two years since the Indian government kicked off its flagship smart city mission. Ninety cities have since been selected for funding under the programme. The total investment is estimated at INR 1,892.6 billion (USD 29 billion) and proposed projects are together expected to impact over 95 million people.
However, Indian cities have recently grabbed the spotlight for another reason. Rising instances of flooding are regularly bringing cities to a standstill, resulting in significant damage to life and property. A preliminary count of extreme weather events in the last five years presents a sobering trend. In this year so far, reports suggest that over 1,000 people have died across India, Bangladesh and Nepal following the worst monsoon floods to hit South Asia in recent memory.
Cities such as Mumbai, Ahmedabad, Chennai and Guwahati have been affected by floods between 2013 and 2017. The size of a city or its available resources has not been a predictor of better preparedness.
Floods apart, heatwave related deaths have become another frequent concern. Bhubaneswar suffered a heatwave in 2013, Hyderabad in 2013, 2014 and 2015. The entire Indian northern and central belt was affected by extreme heat in 2016.
Mapping climate trends in smart cities
Climate-linked trends have been evident in cities for over two and half decades. An aggregation of available data between 1990 and 2013 in the first 20 Indian cities selected under the smart city mission indicates that climatic shifts are already occurring in urban India. In many instances, the impacts from these events have been exacerbated by rapid unplanned urbanisation, overcrowding, lack of inclusive growth and planning, poor maintenance and lack of upgradation of old infrastructure.
What’s more, climate-related impacts are expected to increase in frequency and intensity in the future. The frequency of heat waves is expected to rise, made worse by urban heat islands; and rainfall is projected to become intense and erratic in some regions. Linked to the two, vector- and water-borne diseases are likely to become an even bigger public health challenge.
No explicit focus on climate resilience
Given that Indian cities are facing climate impacts that will probably worsen, it stands to reason that a two-year-old programme like the smart city mission — the largest government driven pan-India effort on urban development — should explicitly focus on urban climate resilience. If the smart city proposals are any indication, then the answer is rather ambiguous.
A study by TARU Leading edge — an organisation working closely with cities — comparing the first 20 approved smart city plans indicates that there is no explicit focus on climate change in any of the 20 city plans analysed. The cities examined are Mumbai, Kolkata, Chennai, Surat, Indore, Kochi, Guwahati, Bhubaneswar, Aizawl and Panaji and the study was entitled Climate Change and Disaster Resilience in Indian Cities: Preparedness of City Governments.
In 17 of the 20 cities examined, requests for funds are predominantly targeted at area-based development across sectors as opposed to pan-city initiatives. It means is that there is greater emphasis on seeking funds for specific projects as opposed to interventions that address citywide development. Climate resilience, for instance, can be categorised as a crosscutting theme, but does not feature in any plan.
It is widely accepted that there are significant overlaps between promoting good development (even in a business-as-usual scenario) and building climate resilience. For instance, ensuring water security can buffer a city against dry spells, and improved housing for poor can limit exposure to extreme weather events. In that context, some of the smart city suggestions potentially build resilience in a default (but not explicit) setting. This is primarily visible in the water, energy efficiency, and sewage and storm water management sectors in the city proposals.
Focus on disasters, not future impacts
In addition, there is some direct focus in addressing natural disasters in cities such as Chennai, Guwahati, Bhubaneswar and Vishakhapatnam. This appears to be driven by their experiences of past disaster events. For instance, in Vishakhapatnam, there is a suggestion for a shore protection plan to counter tsunamis and prevent beach erosion. In Bhubaneswar, the focus, among other things, is on setting up an early warning system for flood and cyclones.
In Chennai, there is a suggestion on sensor-based water level monitoring, along with a surveillance system to forecast and generate warnings for floods and tsunamis. In Guwahati there is request for a hydrological information system (HIS) to be installed for generating real time data for flood forecasting.
However, tackling disasters, based on historical trends alone, is insufficient. It precludes a focus on climate variability over time as well the risk of impacts from slow onset events, such as sea level rise and rising temperatures.
Under-funded on disaster preparedness
Historically, funding on disaster risk resilience in cities has been relatively low. A study comparing fiscal provisions for urban climate and disaster resilience across ten cities in India notes that the per capita capital expenditure in sectors closely linked to disaster resilience is insufficient compared to other areas of funding.
Sectors including sewerage and sanitation, water supply, storm water drainage, solid waste management, economic development, urban amenities and vulnerable populations were all found to be under-funded. For instance, the per capita annual expenditure by the Municipal Corporation of Greater Mumbai on sewage and sanitation has not exceeded INR 250 between 2010 and 2016. On storm water drains, annual per capita expenditure was less than INR 15 until 2015. In 2016, it shot up to INR 350. In addition, disaster management is a component rarely found in the budget documents of urban local bodies.
Compounding the problem is the fact that there is no explicit focus in city plans on initiatives that consider climate and disaster risks over time. For any consideration of climate resilience, plans need to be robust against multiple climate scenarios in the medium to long term. This is especially true in the context of smart cities where there is a focus on building and improving long life infrastructure such as housing, roads, flyovers, water and energy transmission infrastructure etc. which need to be able to withstand future stressors.
Many Indian cities are already involved in climate resilient projects, so why are they not integrated in city development plans? The concept of urban climate resilience is not new in India. There has been a gradual rise in learning in many Indian cities on urban disaster and climate adaptation over the past decade. The Asian Cities Climate Change Resilience Network (ACCCRN) was set up in 2008 and has since partnered with over 30 cities across Asia. The network comprising of external organisations, urban local bodies and NGOs, has conducted vulnerability assessments, and also developed city resilience strategies in a number of cities.
In Indore, for instance, two pilot projects are currently being implemented. In Surat, the Urban Health Climate Research Centre has been set up to address public health and climate change and is being funded by the Surat Municipal Corporation. In Guwahati, relevant recommendations have also been incorporated in the New and Revised Building Bye-laws being prepared by municipality. In Mysore and Bhubaneswar, a training programme on understanding climate change has been conducted.
Similarly, although narrower in reach, the 100 Resilient Cities initiative has focused on the cities of Surat (Gujarat) and Panaji (Goa) to develop more detailed city-level planning and preparedness for climate induced events. The Asian Development Bank has also set up an Urban Climate Change Resilience Trust Fund for Asia and has begun work on building resilience in an integrated manner in Mysore, Vishakhapatnam, and Kolkata.
As part of the state climate plan process, most Indian states have initiated (or completed) district-level vulnerability and risk assessments to define vulnerability better. The awareness and information, therefore, on sub-national climate vulnerability as well as urban resilience strategies exist but does not seem to be aligned to city development planning, particularly the smart city proposals examined.
Some challenges clearly persist in a project-based approach to climate action. There is a gap in ownership of climate resilience strategies among some city-level government agencies; mainstreaming climate resilience in city-level planning and budgeting is still an uphill effort. Cities already struggle in planning and funding other critical development projects and climate change is pressuring an already burdened system. Finally, with few exceptions, the conversation on city resilience has not made it into the national policy discourse in any meaningful way, which could translate to a central mandate to cities.
Given that 90 cities have already submitted smart city proposals and are focussed on implementation, there is an urgent need for cities to look at aligning existing vulnerability and risk assessments and resilience efforts. New and improved urban infrastructure and services need to ultimately hold up to future climate impacts.
Crucially, city agencies as well as state governments (given their greater fiscal agency and mandate over certain aspects of urban planning and spending) need to apply a climate lens on key urban projects, whether they focus on area-based development or pan-city initiatives. Not doing so could, in the long run, undermine the smart city mission.
Residents of Karonga, a lakeside city of about 60,000 in northern Malawi, face no shortage of risks. Flooding is an annual problem that’s worsening with climate change and poor maintenance of the channels that carry out the excess water. Only 17 percent of households have piped water, and half of people use water tainted with sewage, leading to cholera and other disease deaths. But the worst challenge facing the fast-growing city – which records everything from crocodile attack to sexual assault as regular problems – is that there’s no real city government.
Instead, the community operates under the authority of an outdated rural council that is “lacking in transparency and unable to cope with the complex nature of Karonga urban life”, according to a report by Urban Africa Risk Knowledge, a British aid-funded programme focused on helping fast-urbanising sub-Saharan Africa reduce its growing risks. “There are no systems present in small centres” like Karonga, said Mtafu Manda, a researcher with Malawi’s Mzuzu University and the lead author of the report. “Or if they exist, it is only on paper.”
Disaster risks are arguably rising faster in sub-Saharan Africa than anywhere else, said Arabella Fraser, a risk and resilience researcher at the London-based Overseas Development Institute (ODI). That’s in part the result of surging urban populations, a quickening pace of climate-related problems – such as flooding and drought – and an inability to beat back those risks because of poverty, poor data, lack of training and badly run government, she said at a discussion held at ODI on Thursday. But plenty of ideas are emerging about how growing African cities can cut their risks.
Among them: organise slum dwellers to improve the infrastructure or simply sort out which risks are the key ones, and focus on those first, experts at the discussion said. These days, “one of the most difficult jobs in the world is being an African mayor,” said Meggan Spires of the International Council for Local Environmental Initiatives (ICLEI), which is based in Cape Town. “The challenges are vast, complex and immediate, and many are day to day,” said Spires, who formerly worked on climate change issues for the South African city of Durban. Finding time to deal with demands to be proactive and work toward greater sustainability – in line with international agreements like the Sustainable Development Goals or the Paris Agreement on climate change – is a heavy burden, she said.
One thing that can help, she said, is ensuring that efforts to build urban resilience are not just short-term, donor-funded projects but are based on community demand and then built into city plans, often with innovative funding. Donors aiming to improve resilience in Africa need to “be humble and recognise that Africans know their cities best. We should listen to them rather than imposing solutions on them.”
Turning to the slums
One way to get effective change underway is to harness organisations of slum dwellers, who make up large parts of the population in many African cities, said David Satterthwaite, an urban specialist with the London-based International Institute for Environment and Development. About 18 slum dweller federations have formed in Africa, with about 15 of them collecting data door to door on everything from healthcare to schools, drainage to eviction threats.
Satterthwaite called it “an information base that provides a new possibility for local governments…to form, drive and implement new risk-reduction efforts.” One thing that’s clear from data already collected in cities such as Tanzania’s Dar es Salaam, for instance, is that health threats kill many more people each year than floods, even though residents see those as the biggest risk, he said. That means investments in things like sanitation systems and clean water may have the biggest payoff – though getting funding can be tough when donors focus on climate change adaptation or disaster risk reduction efforts, Satterthwaite said.
Manda, of Malawi, said keeping politics in mind is also key to making progress in Africa’s cities – and small cities have the toughest challenges of all, he said. Political leaders “don’t think about the small towns, partially because they don’t live there but also because they want to benefit from the chaos”, he said. “When there is a disaster, when they go there as some kind of saviour, they are seen to be very good,” he said. “And because of that, the risks in these small towns will escalate.”
Reporting by Laurie Goering @lauriegoering; editing by Lyndsay Griffiths. Credit: Zilient, an initiative of The Rockefeller Foundation, the Thomson Reuters Foundation, Blue State Digital and OnFrontiers. All rights reserved. Thomson Reuters Foundation, the charitable arm of Thomson Reuters, that covers humanitarian news, climate change, resilience, women’s rights, trafficking and property rights. Visit http://news.trust.org/climate.
Cover photo by Paul Saad (CC BY NC-ND 2.0): Durban, South Africa.
Floods can have large-scale and devastating consequences. The mudslide that happened in Freetown, Sierra Leone, several weeks ago is a striking example of urban devastation. Over 1,000 people lost their life after days of torrential rains collapsed a hillside in Regent, 15 miles east of Freetown. In August, Sierra Leone received as much rainfall as Canada does in a year. Exploring the causes of this tragedy provides a basis to grasp the challenges posed by rapid urbanisation and climate change.
Sierra Leone belongs to Sub-Saharan Africa, which is one of the world’s fastest urbanising regions, triggered by strong population growth, 2.2% per year in Sierra Leone, and rural flight. In their search for better infrastructure and economic opportunities, Sierra Leoneans converge toward Freetown, where they try to settle. Consequently, capital cities such as Freetown are quickly sprawling, at the expense of their inhabitants’ safety.
However, the capital’s expansion leads to more constructions, which are often illegal and built on hazardous land that is vulnerable to weather impacts. Deforestation is an exacerbating factor for landslide risk, since trees and forests have an important role in preventing them, “not only by reinforcing and drying soils but also in directly obstructing smaller slides and rock falls”, according to the Food and Agriculture Organization. Moreover, the population was not prepared to face a mudslide, that had previously never occurred at this location.
As climate change will compound extreme weather events, vulnerable urban areas are increasingly exposed. In developing countries, urban resilience and risk management measures are necessary to avoid wider socioeconomic inequalities. In Freetown for instance, wealthier residents can afford to move to higher altitudes while already economically deprived inhabitants are left exposed to the floods’ consequences.
Preparing cities to extreme weather events would enable to avoid large-scale catastrophes like the one that struck Freetown this summer. The Mayors’ Task Force on Climate Change suggests several leads on this issue, and highlights that local governments “play a vital role in financing and managing basic infrastructure”, and should mainstream risk reduction into urban management. Early warning and evacuation procedures for example should be implemented and could drastically lower the number of casualties.
Cover photo by David Hond (CC BY 2.0): Aerial view of Freetown, Sierra Leone, a helicopter expedition to Lungii airport, over the Freetown Harbour.
In our last blog post, we discussed the concept of bankability: “Bankability” implies that lenders and investors believe the risk exposure of a project does not outweigh its return potential. Bankability as a concept is not only relevant to private developers in their quest to finance their projects, but also to cities trying to raise capital. Climate change is already impacting cities’ ability to maintain and develop infrastructure to meet their residents’ basic service needs: freshwater, energy, wastewater treatment, transportation, and waste management, among others, are under threat from storms, sea level rise, and other climate-related phenomena. Unlike national governments, many cities – especially those in emerging markets – may have limited access to debt markets (as of 2013, only 4% of the 500 largest cities in developing countries had access to international debt markets), and their risk exposure to natural threats can be both acute and chronic.
How then do cities invest in 21st-century infrastructure when climate risks are rising? We would argue that any city-level investment program should be climate resilient, and that financing should incentivize such measures.
Many cities and other institutions are tackling the dual challenges of infrastructure financing and climate resilience by fusing them. Green bonds, green and resilience banks, disaster and natural capital insurance, public-private partnerships (PPPs), pooled financing, and other innovative financing arrangements have the potential to provide returns to investors and investment capital to cities by aligning their incentives. If cities invest in resilience to climate change and natural disasters today, they can reduce the likelihood of costly episodes that result in losses to investors. In a virtuous cycle, such investments could increase cities’ bankability, reducing their risk premiums and interest rates when they access the bond and insurance markets in the future.
Examples of this kind of innovation – with novel elements of both urban design and municipal financing – are proliferating rapidly and are almost as diverse as cities themselves. Sanitation and sewage may sound unsexy, but it is an innovation hotbed. Many cities with combined storm water runoff and “sanitary” (household waste) sewer systems face serious environmental crises during storms when sewage can overwhelm waste treatment facilities and flow directly into rivers and lakes. The U.S. EPA has warned many cities that their water quality situations resulting from combined sewer overflows (CSOs) are critical and require immediate investment. The solution? A number of innovative approaches are being deployed. For example, better storm water management technologies are helping cities be more responsive to real-time issues and can prevent costly damage to infrastructure and homes.Also, cities are proactively installing storm water gardens and resilience parks. One such park planned in Hoboken, New Jersey, has a dedicated storm water retention basin incorporated into a public park and parking garage to prevent runoff into the sewage system.
Such solutions can be taken to scale or, at a minimum, be integrated into overall infrastructure investment, and then incorporated into a municipality’s financing strategies. In a city-wide initiative, the District of Columbia in 2014 issued a $350 million bond, the first green bond by a municipal water utility in the U.S. According to the District’s water authority, “The issuance achieved its green certification based upon the DC Clean Rivers Project’s environmental benefits, which include improving water quality by remediating CSOs, promoting climate resilience through flood mitigation, and improving quality of life through promotion of biodiversity and waterfront restoration.” Municipal green bonds are now taking flight in emerging markets as well: Mexico City issued a $1 billion green bond in 2016, the first for a Latin American city. The bond was oversubscribed, emboldening Mexico City to plan a second green bond issuance.
Green bonds have the virtue of using all of a city’s creditworthiness to raise earmarked resources for green projects. But that doesn’t mean that getting a certified green bond is easy. In order to issue the CDMX Green Bond, Mexico City had “to accomplish four basic things: 1) have defined sustainable programs and policies; 2) be able to prove transparency processes; 3) have healthy finances; 4) and develop an integrated work plan in coordination with the local Ministry of the Environment and Finance, along with national institutions.” Certification schemes, such as for climate bonds, are also arising to give investors certainty of the securities’ environmental benefits. These steps aren’t easy to complete, which is why donors, consultancies, non-profits, impact investors, and foundations are stepping into the breach to provide cities with planning expertise and to help them raise adequate capital. 100 RC has, to date, helped 32 global cities complete citywide resilience strategies, most recently Boston; Santa Fe, Argentina; and Toyama, Japan. The C40 Cities Finance Facility (CFF), launched in 2015 with funding from the German and American governments, is designed to help cities tap into the green bonds market.
The performance-based payments structure of the DC EIB helps to address a key bankability challenge: performance measurement and risk assessment. Unlike most traditional “gray” infrastructure, many new green infrastructure projects that are integrated into natural systems like tree cover, soil water retention, and river flow have performance characteristics that are difficult to measure. DC overcame this difficulty by “building a pilot green infrastructure installation that channels all water from its site into a single, gauged outflow pipe,” measuring outflow over 12 months and then employing sophisticated water flow software.
These are just a few examples of innovative finance and project approaches to expand the city-level solutions that are both bankable and climate-resilience. Stay tuned for future blog posts that look at other aspects of “bankability” and climate-resilient investment.
Communications play a big role to make a change, including in raising awareness towards urban climate change and resilience. However, this topic is not as popular or interesting as other development issues such as economics, poverty, or President Trump.
The question is, “How do we engage people to pay attention to information and discussion related to Urban Climate Change Resilience?” and also, “who are these people we want to engage?”
On Wednesday, 19 July 2017, ACCCRN hosted a webinar where we could learn about communications strategy implemented in Urban Climate Change Resilience field and on how to engage people to participate in the discussion. Will Bugler, Senior Communications Consultant and Communications Lead at Acclimatise, shared his experience on this topic followed by discussion facilitated by Nyoman Prayoga, Member Relations Manager of ACCCRN Network.
In a recent installment of the BBC’s Worldwide Service “Business Daily” show, Ed Butler traveled to Florida to learn more about the impact sea level rise is having on the state’s booming real estate market.
“The forecast is not too bright,” Butler says as he arrives in Florida greeted by turqoise water, mansions, and yachts. Florida’s coastal real estate is some of the most economically valuable in the United States, but with more than one million homes having been built just a metre above sea level, climate change is posing a significant threat to it and its residents.
So far, the real estate market is alive and well on Florida’s coast and no one seems to be panicking. Mortgage broker Courtland Hunt, for example, offers 30-year loans for people living in areas that already flood frequently and could be under water permanently by 2050. As he puts it, “if the government and insurance companies say these people can buy a home, then I’ll help them buy a home.”
South Miami Mayor Philip Stoddard, on the other hand, voices his concern that coastal mortgages could be the next financial bubble to burst. He says that “right now, South Florida is still a lot of fun,” but he is aware that at some point investors will stop putting more money into the region due to increasing flood risk, salt water intrusion and loss of fresh water.
During the episode, Ed Butler also talks to home owners who have been stranded by high tides, and delves a little bit more into the rising issue of getting coastal homes insured.