Sunday, September 28, 2014

Obdurate Ignorance Meets Flood Insurance

Eli has been writing about the problems that sea level rise poses for the east coast of the US from Cape Hatarras north.  North Carolina has chose the ostrich strategy driven by a blog scientist called John Droz.  As Eli wrote, about the only thing that might save the situation are the fleeing insurers. 

The Bunny was wrong, it's gonna be the home owners who have to pay for flood insurance.

Today in the Virginian Pilot on Line, an article by Aaron Applegate appears about how real estate (aka houses) in high flood risk areas just is not selling.  Applegate uses the house search of two 30ish newlyweds as the hook for the story
They would search for a home in Norfolk to be near Josh's office. But it could not be in a flood plain, susceptible to rising seas, storm surge and escalating flood insurance prices.  
 Their decision is one glimpse into the changing dynamics of coastal real estate. A growing awareness of sea level rise and flooding, coupled with rising flood insurance premiums as the federal government phases out subsidies, has the potential to reshape segments of the Hampton Roads market.
Sellers are having to alter houses to deal with the risk of flooding, such as moving basements to attics (or at least the heating and cooling plants)
Real estate agent Kathy Heaton found herself on the flip side of the growing concern, and perhaps at the forefront of a new trend.

For months, the Nancy Chandler and Associates agent had been trying to sell a home in the desirable Norfolk neighborhood of Larchmont. The problem: Like many homes in that area, it's in a high-risk flood plain. Flood insurance could run up to $3,500 based on estimates she's seen.

That would add almost $300 to a monthly mortgage, an amount many buyers Heaton has encountered would rather put into the cost of a home.

Regular homeowners insurance does not cover flooding. Homes in the flood plains with mortgages are required by lenders to have insurance from the subsidized National Flood Insurance Program. It is struggling financially, and reforms are steadily increasing rates - about 18 percent a year - until they represent coverage of the true cost of the risk.

The specter of flood insurance is making the Larchmont home, assessed at around $270,000, nearly impossible to sell.

"We've probably had 35 showings, and everybody has walked out because of the flood insurance," Heaton said.

The home is not unique in a city penetrated by tidal creeks with some of the highest rates of sea level rise in the country, a combination of sinking land and rising water.
King Canute had it easy.


Anonymous said...

Interestingly, Norfolk is the largest coal exporting port in the US.


John Mashey said...

The Dutch think in century-scale about water issues and they have one answer:
Google Images: netherlands floating houses.

From random encounters, they expect to export their expertise.

But wasn't VA the state where the legislature banned the phrase "sea level rise" in favor of "intermittent coastal flooding" or was that just a rumor?

Hank Roberts said...

Welllll ....

"OAK ISLAND, N.C. -- North Carolina is planning changes to state flood maps that could have a dramatic financial impact on coastal property owners.

The updates would designate certain areas as having reduced flood risk. In Oak Island, for example, officials are expecting several areas to go from designation “VE” to “AE.”

VE represents areas that are subject to flooding with wave action greater than three feet, while AE areas are subject to just rising water.

“The VE is higher risk than the AE; therefore, there's an increase in insurance and also the requirement for stricter building guidelines,” said Steven Edwards, Oak Island’s building code administrator.

Edwards said Oak Island property owners whose homes go from VE to AE could see their insurance rates fall from tens of thousands of dollars into the low thousands....

Randy Moffitt, who owns a home-building company and a plot of land that is slated to go from VE to AE, is excited for the changes.

"It's actually a cost-savings from a construction standpoint as well as a significant savings from the insurance standpoint,” he said. "With the reduced cost of flood insurance, that makes it more attractive to buyers.”

Moffitt said a greater number of interested buyers would likely bring more business for him and other Oak Island builders.

If adopted, the proposed changes would be the first to the state’s flood maps since June 2006. Edwards said the proposals would be subject to a 90-day public comment period, and that he expects the new maps to be officially adopted in 10 to 12 months."

- See more at:

Hm, so, no wave action? Beach front property!

Anonymous said...

Hank: Two thoughts about the map-redraw:

1> Are the insurers dumb enough to fall for that little trick? If I was writing flood insurance, I'd be leery of politcally-motivated changes to the maps.
2> Is this not a little like having the state redefine pi as equal to 3.0 just for the sake of convenience?


Anonymous said...

OT, but isn't it long past time for another of Brian's Obama-war-cheer-leading installments?

You know, like he did on Libya?

How will Obama and Democratic party officials know how much Brian appreciates their latest actions (and his future chances in a Congressional bid) if Brian does not record it for all eternity here on this blog as he has so diligently done in the past?

Mitch said...

IF you are paying attention to congress, there is an effort to put more subsidies back for flood insurance, so that building on the coast can continue. Bad idea.

Why Hockey Sticks are True said...

Is anybody talking about SLR in San Francisco bay which would backfill the huge San Joaquin agricultural region, some of which is already below sea level?

Fernando Leanme said...

SOME local flooding can be abated using improved drainage systems. One of my properties in Harris County Texas is located in an area which used to have the flood line come within 50 cm. They seem to have fixed it by building partial damns and digging low areas which turn into ponds when it rains. They also stopped pumping water from aquifers to avoid subsidence (now the water comes from surface sources).

Mal Adapted said...

John Mashey: "But wasn't VA the state where the legislature banned the phrase "sea level rise" in favor of "intermittent coastal flooding" or was that just a rumor?"

No, that was North Carolina. Virginia seems somewhat more rational at the state and municipal levels, although some residents are "skeptical" of SLR:

"When [Norfolk city] planners proposed to rezone land for use as a dike against rising water, these residents, or 'new activists,' as [planner Lewis L.] Lawrence calls them, saw a trick to take their property.

“'Environmentalists have always had an agenda to put nature above man,' said Donna Holt, leader of the Virginia Campaign for Liberty, a tea party affiliate with 7,000 members. 'If they can find an end to their means, they don’t care how it happens. If they can do it under the guise of global warming and climate change, they will do it.'”

No wonder it's so hard to get good people to work in government 8^(.

Sloop said...

FEMA has final say on National Flood Insurance Rate maps (FIRMs) . States, counties, and muni's can appeal map delineations but they don't have final say. FEMA and NC have apparently been working through updates to the NC FIRMs. Adjusting zonations between VE and AE of course will help some property owners and development companies and realtors but, buyer beware, FEMA doesn't (yet) incorporate SLR projections into its maps. The relevant data is topography and historic storm surges, flood elevations and property-specific hazard mitigation actions such elevating property, and relocating utilities.
Norfolk metro area right up there with Miami metro area as a poster child for SLR vulnerability.
Property/flood insurance premium increase rates are however becoming worrisome issue along considerable portions of the US atlantic coast. County/municipal budgets that rely heavily upon property taxes also exposed.

John Mashey said...

Global Warming Text Was Removed From Virginia Bill on Rising Sea Levels

'Looking to address flooding and encroaching sea water on the coast, Virginia lawmakers recommended a scientific study on the problem. When state Sen. Ralph Northam pushed the study through the legislature in February, he met resistance from Republicans who didn't want any reference to "sea level rise" or "climate change" in its language.

"(State Rep. Chris Stolle) said 'This isn't going to work with "sea level rise" in there, it's not going to go anywhere if we don't change it'," says Northam.

Stolle told The Virginian-Pilot those were "left wing-terms," and that "political speech" was eventually removed and replaced with "recurrent flooding," "coastal resiliency," and "increased flooding risk."'

Mal Adapted said...

John Mashey: "Mal: Global Warming Text Was Removed From Virginia Bill on Rising Sea Levels".

Yeah, that was a low point for VA, but there's some indication of sanity breaking out more recently:
Bipartisan group discusses threat of rising sea levels in Hampton Roads

My brother lives in Norfolk, on a tidal inlet that occasionally floods the crawl space of his house. I've nagged him for years to sell and move uphill before word about SLR gets around. It may be too late by now, though. His mortgage is paid off, so at least he's not "underwater" 8^}.

Hank Roberts said...

Ya know, the economists, even if economics were a science, wouldn't be listened to. And the scientists aren't listened to.

Most of this distraction is rodeo clowning, to keep people from paying attention.

---- Krugman in the NYT ----excerpt

... would it have mattered if economists had behaved better? Or would people in power have done the same thing regardless?

If you imagine that policy makers have spent the past five or six years in thrall to economic orthodoxy, you’ve been misled. On the contrary, key decision makers have been highly receptive to innovative, unorthodox economic ideas — ideas that also happen to be wrong but which offered excuses to do what these decision makers wanted to do anyway.

great majority of policy-oriented economists believe that increasing government spending in a depressed economy creates jobs, and that slashing it destroys jobs — but European leaders and U.S. Republicans decided to believe the handful of economists asserting the opposite. Neither theory nor history justifies panic over current levels of government debt, but politicians decided to panic anyway, citing unvetted (and, it turned out, flawed) research as justification.

I’m not saying either that economics is in good shape or that its flaws don’t matter. It isn’t, they do, and I’m all for rethinking and reforming a field.

The big problem with economic policy is not, however, that conventional economics doesn’t tell us what to do. In fact, the world would be in much better shape than it is if real-world policy had reflected the lessons of Econ 101. If we’ve made a hash of things — and we have — the fault lies not in our textbooks, but in ourselves.
A version of this op-ed appears in print on September 15, 2014, on page A23 of the NYT's New York edition with the headline: How to Get It Wrong

bratisla said...

@garhighway : in France, the insurance group MAIF is funding directly research institutes in coastal flooding risks along with their team of researchers. So they have this way a direct source of knowledge over the administrative maps.

I expect many insurers (like Munich Re) to behave the same way.

Sloop said...

Bell et al. "Maps, laws, and planning policy: working with biophysical and spatial uncertainty in the case of sea level rise." Env. Scnce. & Policy 44(2014) 247-257

Abstract: Rapid sea level rise over the 21st century threatens coastal settlements and populations worldwide. Significant land-use policy reform will be needed to mitigate exposure to hazards in the coastal zone. Sea-level rise maps that indicate areas that are potentially prone to future inundation are a valuable tool for policymakers and decision makers. However, errors, assumptions, and uncertainties inherent in spatial data are not often explicitly recognized or communicated. In 2011, the state of Queensland, Australia, published a series of ‘state of the art’ sea-level rise maps as part of its coastal planning regime. This article uses the Queensland coastal planning regime as a case study to explore how errors, uncertainties and variability in physical, geographical and biological processes in the coastal zone pose challenges for policy makers. Analysis of the case study shows that the use of spatial data in sea-level rise policy formulation is complicated by the need to: (1) acknowledge and communicate uncertainties in existing and projected rates of rise; (2) engage in site-specific mapping based upon best available scientific information; (3) incorporate probabilities of extreme weather events; (4) resolve whether coastal engineering solutions should be included in mapping; (5) ensure that mapping includes areas required for future ecosystem migration; (6) manage discretion in planning and policy decision making processes; (7) create flexible policies which can be updated in line with scientific developments; and (8) balance the need for consistency with the ability to apply developments in science and technology. Scientists working with spatial data and governments developing and implementing coastal planning policies can recognize, communicate, and seek to overcome uncertainty by addressing these factors.

This article is not behind a paywall.

Anonymous said...

I always thought it would be the lenders that would cotton on first. Unless the lender can on-sell the mortgage, he is stuck with it long term.

Insurers on the other hand can always refuse to renew policies, so the flood insurance for this year does not imply coverage for the life of the mortgage.

Mortgage holders risk being left with a valueless house, or no house, long before the mortgage is paid out.

I guess insurers are smarter than mortgage holders. Eventually mortgage buyers will wise up.

Rabid Doomsaying Little Mouse

david lewis said...

FEMA acting through the National Flood Insurance Program is basically the only flood insurance issuer in the US. The problem for private insurance companies is that it is very easy to predict where flooding will occur and only a limited number of properties are affected. Compare the situation to fire insurance, for instance.

It isn't just coastal flood insurance rates that are rising. I live in the Pacific Northwest near Seattle. We're told, that no matter that our premiums have covered our claims since the NFIP was created, that because we live in "flood plains" we're enjoying "subsidized rates" and consequently, to correct the situation, our rates will rise at least 10% per year as far into the future as anyone cares to look.

What happened is that FEMA is in debt due to the combination of Katrina and Sandy. The debt is somewhere north of $24 billion. The current plan is to extract this from anyone living in any flood plain in the US, rather than from the general US taxpayer.

Suddenly, anyone buying a house in this area wants to see an elevation certificate. If you've got one that says your home won't suffer damage in the 1% risk event, you win: you can buy cheap flood insurance if you want it, you aren't required to carry it if you have a mortgage, and you can sell your home. If you don't, you lose: your home sells at a discount, you are required to carry increasingly expensive insurance if you have a mortgage, and you are subject to increasing fear that you or subsequent owners will be forced out of your/their home by rising insurance rates, i.e. your property value is liable to plummet even further.

North Carolina is fiddling with the maps to keep their economy going. The cost is either going to be picked up by people like my neighbors some of whom bought before it was generally realized there was any flood risk at all here, or its going to be picked up by the general US taxpayer.

Washington State isn't fiddling with the flood maps. Lenders here keep tabs on borrowers making sure they keep flood insurance on their homes if they have mortgages. Lenders in coastal areas in the East have been proven to not be so vigilant: when the extreme event happens, those without insurance suddenly want everyone to know.

It is in North Carolina's short term interest to outlaw taking sea level rise into consideration and to fiddle with the flood risk maps.

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