The destructive forces unleashed by Tropical Storm Irene in 2011 and Superstorm Sandy in 2012 have left a number of northeastern states with challenging decisions about how best to manage the risks of increasingly frequent and severe weather events. One particularly complex issue involves policy approaches to sites that undergo repeated flooding. Should government and the insurance sector underwrite the rebuilding of periodically devastated areas or instead push for relocation through regulatory actions and redefined terms for flood insurance? The question pits benefits that relocation can offer to the larger community — by reducing economic impacts of future flooding and allowing formerly developed lands to provide natural storm buffers — against costs to a smaller group of people whose property rights, neighborhood attachments and sense of identity are affected.
At a recent conference sponsored by Columbia University’s Center for Climate Change Law (CCCL), speakers discussed the legal, regulatory and economic factors raised in such circumstances. One presentation highlighted policy lessons that can be gleaned from case studies of communities that have already made the choice to retreat from vulnerable floodplains. For participants at the March 28 event, always in the background was the awareness that five months earlier, almost to the day, Superstorm Sandy cost scores of lives and devastated communities in the tristate area of New York, New Jersey and Connecticut, causing damages in excess of $70 billion.
Following Sandy, Governor Andrew Cuomo of New York proposed dedicating about $400 million of his state’s federal recovery funds to voluntary buyouts for homeowners in devastated neighborhoods, based on pre-Sandy property values. Added incentives would be available if enough people in one area agreed to relocate so that wetlands and dunes, capable of buffering the impact of future storms, could be restored. More recently, New Jersey’s Department of Environmental Protection said the state will unveil a similar plan for voluntary buyouts of about 1,000 homes in vulnerable locations where enough land could be acquired to reconstruct protective floodplains.
“But the major issue is scale,” said Michael Gerrard, the director of the Center for Climate Change Law and a professor at Columbia Law School.
If the median price of a house in Greater New York, for example, were $300,000, then the available state funds could buy out only about 1,300 homeowners, a quantity that doesn’t approach the numbers of buildings and infrastructure at risk, especially given climatologists’ predictions of future sea-level rise and increasingly intense storms in the Northeast, said Gerrard.
Alternatives such as armoring coastlines with storm walls and levees or raising building elevations aren’t viable over the long run, both because of the expense and the limited protection they afford, said J. Peter Byrne, a professor at Georgetown University Law School who directs the Georgetown Climate Center.
“Armoring isn’t possible everywhere, and buildings can only be elevated so high,” he said.
The Alternative of Managed Retreat
As a result, there is more talk among legal experts and policymakers of so-called “managed retreat” from areas subject to repeated coastal and riverine flooding, said Gerrard.
Byrne spoke about the legal issues that may be raised when government either directly mandates relocation or institutes regulations that may eventually force property owners to move. Either approach can trigger constitutional issues connected with “regulatory taking,” a term that signifies the appropriation or diminution by government of private property rights protected in the Fifth Amendment, unless the taking is accompanied by just compensation or promotes a sufficiently important public use, said Byrne.
Byrne gave some examples of regulations that, in his judgment, courts would accept. Zoning regulations for coastal property might require a specific setback of buildings from the mean high-tide line, which could change over time as a result of sea level rise, or a municipality could prohibit owners from building sea walls or levees, rendering the property unusable over time, he said. But until such circumstances arose, property owners would have full enjoyment of their land and structures, said Byrne.
To illustrate the principal, Byrne cited cases in California where the courts have allowed the issuance of conditional building permits that require a property owner to give up the right of armoring so as to mitigate legitimate harms – the likelihood that armoring one property would cause greater damage to neighboring properties and would prevent public use of the intertidal region of a beach that under the public trust doctrine, cannot be privately owned. But in about 20 states, property owners are specifically allowed to protect themselves against sea-level rise without considering the impact on others, so what is acceptable in California would not be in those jurisdictions, he said.
The Role of Insurance
“Insurance policies offer a tool capable of improving property owners’ decision-making by providing signals that prompt them to take action before disaster occurs,” said Howard Kunreuther, professor and co-director of the Risk Management and Decision Processes Center at The Wharton School of The University of Pennsylvania.
Kunreuther outlined guiding principles for effective policies. First, premiums must accurately reflect risk, something rarely true for low-probability events like storm surges, although of real value in indicating how hazardous an area may be and how worthwhile cost-effective mitigation measures can be, said Kunreuther. It is also helpful to adjust policy rates and make long-term loans available for owners who carry out mitigation steps, he said. Rather than lowering policy rates for low-income home owners for reasons of equity, he recommended making vouchers available in order to preserve the signal value of the policy.
Kunreuther further recommended that policies have multi-year terms and be tied to property rather than to owners. He explained that research shows most people stop paying for flood insurance if they don’t experience flooding within three years of first purchase, and most mortgage holders don’t enforce the requirement to maintain it. But if coverage were a property requirement that was not renewed on an annual basis, it might be easier to enforce compliance, he said.
According to Kunreuther, the Biggert-Waters Flood Insurance Reform Act, enacted by Congress in July 2012, begins to address these issues by providing for rate increases on existing National Flood Insurance Program policies of up to 25 percent per year for five years, until premiums reflect the full actuarial costs, and by phasing out subsidies for policies on second homes, businesses and severe repetitive loss properties. Importantly, the new law requires flood map modernization, since premiums cannot accurately reflect risk without improved maps, he said.
While insurance policies can make useful contributions, they are only one component of a suite of policy steps, such as zoning and building codes, that are necessary for protection against the impact of a changing climate, Kunreuther said.
Prior Efforts at Managed Retreat
“Despite the many challenges involved, managed retreat has already been carried out in some places,” said Anne Siders, associate director of the Center for Climate Change Law at Columbia.
Maine provides an early example with its Coastal Sand Dune Rules (implemented in1979 and updated in 1993), which limit the extent of permissible development on property to 40 percent of total acreage, require a structure to be removed if a wetland extends to it for over six months, and ban new seawall construction, among other provisions, she said.
Siders also discussed multiple cases of relocation that occurred following severe riverine flooding in the Midwest in the 1990s. Her examples included relocations after a 1997 flood in Grand Forks, North Dakota, in which 87 percent of homes were damaged, and after a series of floods in Iowa during the period mid-April through September 1993. All 99 of Iowa’s counties were declared federal disaster areas, and 23,000 homes were damaged, she said.
The 1993 Midwestern floods prompted federal action in the form of the Emergency Wetlands Reserve Program, which authorized one-time purchases of conservation easements to return farmland to wetlands, and the Hazard Mitigation Relocation Assistance Act of 1993, which raised the contribution of the Federal Emergency Management Agency (FEMA) to mitigation efforts from 50 to 75 percent, Siders said. The bill also amended the Stafford Act – the 1988 law that authorizes most Federal disaster relief activities — allows that funds might be used for one-time buyout and relocation efforts, with the proviso that no future building occur on purchased locations and no future relief funds be made available to these lands, she said.
Reviewing the efforts of various Iowa counties to promote voluntary relocations and flood mitigation steps, Siders extracted a number of best practices. These include rapid action, public involvement at all stages, building public amenities into mitigation projects, providing relocation assistance, and creating fair incentives for relocation that follow strict formulae to prevent individual property owners from holding out for better terms, she said.
Practicalities Can Complicate the Goal of Retreat
What is possible in rural areas and small cities may not work in a densely developed urban site like New York City, said Vicky Been, a law professor and director of New York University’s Furman Center for Real Estate and Urban Policy, whose presentation demonstrated the complexities related to the issue of scale, initially raised by Gerrard.
The area flooded by Sandy’s storm surge encompasses 24 percent of New York City’s land, where almost 76,000 buildings are located, comprising more than 300,000 residential units, or 9 percent of the city’s total, Been said. Also affected were areas that contain 50 percent of the net additional building capacity associated with Bloomberg-era rezonings, she said.
If we look at sites in the city’s A, B and C hurricane evacuation zones, which correspond to potential flooding from category one, category two-plus and category three-to-four storms respectively, then more than one million residential units in about 270,000 buildings might be affected by future storms, said Been.
But even limiting the scope of analysis to Sandy’s reach, Been demonstrated how massive the challenges would be if the city were to drive relocations in these neighborhoods through measures like rezoning, building codes and environmental quality reviews.
More than 62,000 renters filed claims with FEMA, and of these, about 64 percent have incomes below $30,000, said Been. But city data show that less than 14,000 affordable rental units would be available for the households in this group, and the 62,000 figure doesn’t include renters who did not file claims, she said.
If the city were to develop a managed retreat policy that covered both renters and owners in the areas devastated by Sandy, the situation becomes even more complex and costly, Been said. Not only would funding be required for buyouts and relocation assistance, but there would be huge challenges — financial and otherwise – such as rebuilding infrastructure to support new land-use patterns, locating lots for replacement housing, restoring and managing vacated land as natural storm buffers, and protecting no-build areas from development pressures over time, she said.
Even in good economic times, we aren’t very effective at providing for many of these practical needs, Been said.
—By Eleanor Saunders