Friday, August 29, 2014

The Future of the Coast

Anthony Flint appreciates the beauty of the Rhode Island coast but worries about its future.  With sea level rise, there certainly will be specific parcels of land and structures there that will vanish.  The owners of such parcels will lose.  Anticipating this, the structures will be allowed to depreciate and they won't have any valuable possessions (or people) in them when they submerge. This is an example of how expectations reduce the cost of climate change.  

As land is lost, other land becomes more valuable.  Other "higher ground" pieces of coastal real estate will go up in value.  Changes in zoning laws would allow more people to live there.  So, instead of having a single family house on a bluff with a view of the ocean there could be a 20 story building (see Ocean Avenue in Santa Monica).   Look at this building. Do you see its stilts. It overlooks the Pacific Ocean.  

This simple example highlights how adaptation takes place. Note that the free market guides this process.  No President or Governor guides this set of events.