South Florida Market Waking Up to Climate Risk
It’s no secret that Miami’s ultra-pricey real estate market is close to the top of the list in terms of climate risk (see my song “Chasing Ice Blues“). South Florida’s climate risk even made the cover of National Geographic a couple of years ago.
Why would people keep putting up, or banks keep financing, new buildings which will likely be in serious trouble long before their mortgage can be paid off? Remember, a market’s value can tumble long before the buildings themselves are in physical trouble.
Consider this scenario: Recurrent tidal flooding and storm surges periodically overwhelm a city’s water facilities, contaminating water supplies with raw sewage. It’s just a short step from there to breakdown of public health, infectious disease outbreaks, and outmigration of residents. Another very short step to collapse of the tourism-dependent real estate market, and the region’s tax base. That means no money for cleaning up, or financing adaptation or climate mitigation work.
I don’t get it. What’s the good news?
According to Bloomberg News (Dec 29, 2017), South Florida’s real estate market is finally starting to wake up to their climate risk. Research shows properties exposed to sea-level rise now selling at a 7% discount compared to similar properties on higher ground. This is an important sign of rising awareness.
Jeff Goodell’s excellent book “The Water Will Come” (2017) devotes an entire chapter to Miami. He discusses the politics that keep sea-level rise and climate risk out of the public eye. Bringing these risks out in the open, Miami officials explain, would risk collapsing Miami’s lucrative real-estate market, much of which is kept propped up by foreign investors.
Despite numerous unprecedented extremes of weather, wildfires and flooding in the United States in 2017, our present administration is treating it all like fake news (see my video “Fake Weather“). At a cabinet level, Trump’s administration has turned its back on science altogether, including environmental science essential to maintaining public health. Scott Pruitt’s EPA now stands for “Everyone Pollute America“.
Ironically, the business world is now riding to the rescue. Global investment giants BlackRock, Vanguard and Fidelity in 2017 put businesses on notice about disclosing investment risks of climate change. Credit rating giant Moody’s just recently warned cities to develop a climate plan or risk a credit downgrade. And now, finally, the South Florida real estate market is waking up.
The common sense survival instinct of the American business community will win out over the ideological shortsightedness of our present administration. Bitter medicine, perhaps. But finally waking up is definitely good news.