If you look at various financial crises throughout history, you'll see that even amid increasingly clear evidence of problems, the status quo is surprisingly sticky. Things move along as normal, and everything seems fine until suddenly... they don't. In hindsight things seem obvious, but at the time it's difficult to know if you are merely flirting with the edge, or you've actually gone over it.
Miami real estate (and other low lying shorefront) isn't quite at that 'oh crap' moment yet. While the evidence for CO2 driven rising sea levels is clear to me, there are plenty of financiers from the previous generation for whom it isn't. And even if they're wrong on global warming, they might be right on sea-walls, pumps and other mitigation methods. The Raising of Chicago lifted the entire city up 3-6 feet with merely 1850s technology, so it's not as if we can't solve Miami's sea level issue with sufficient investment. The issue is who foots the bill, how large it is, and what neighborhoods are left to the sea.
It is a long title as is, but should read Miami Beach.
Rising sea levels are an interesting question for barrier islands like Miami Beach and Florida as a whole.
Though its important to also understand some of these articles unfairly paint sea level rise and climate change as responsible for a new phenomenon, the truth is Miami Beach has always flooded (during full moons water can rise right up through the ground). Not to mention Hurricanes, but truthfully Miami Beach has been sparred for the most part considering all the potential direct hits over the years and the fact that Andrew was a relatively dry hurricane. Al things considered, the engineering has always been impressive and continues to improve, just look at pre/post Hurricane Andrew codes.
Does the Miami Beach flood, sure, but no more than say Charleston, South Carolina. Or have you ever drove on a road that wasn't cracked in NOLA because the salt, (its actually below sea level), Miami Beach doesn't have that issue.
I will say this about the article, it doesn't even bother pretending or discussing how Miami Beach/Miami/Florida might position itself to take a leadership position issues of climate change and sea level rise. Moreover, there is almost an acknowledgement and reading between the lines of the money going into development as a scam on foreign investors...personally, I think that is pretty far off, but I can't help but admit such a fraud would be so Miami that it would be poetic.
Miami Beach has always flooded (during full moons water can rise right up through the ground).
I have lived in FL all my life (41 years), my family spans back 12 generations from me. King tides are nothing new, nor is Miami flooding during them. I live in the Keys which is lower lying than Miami beach but we have the safety of the barrier reef that mellows the tidal changes, this is just a sensational piece due to a rare but historically recurring event. Miami is not flooding for good, we are in a weather cycle coming off El Nino into a lunar cycle, it happens from time to time. It's not exactly intellectually honest to attribute a known phenomenon (King tides, which is the reason Miami is currently flooded) to climate change. It was not climate change in the 1800's when the old timers dealt with them. This is not meant to be a dissertation on climate change, rather to highlight pieces like this do more damage than good to the arguments that climate change science presents when items like this are highlighted as the predicted outcomes.
The floods are worse this year because we have a combination of El Nino weakening the gulf stream which in a normal year has some effect on pushing tides longitudinal as well as flattening them and King tides which are caused by a lunar event, not anything terrestrial. It is an unusually event for sure but has historically happened before. This is a combination of two natural phenomena, nothing more nothing less. It should not be attributed to climate change which has it's own real concerns. Climate change is not contributing to the current situation of Miami being flooded. Attributing it to it, does more to discredit climate change and give voice to fear mongering than it does to further it's cause.
> Climate change is not contributing to the current situation of Miami being flooded
What is that based on?
> The floods are worse this year ...
Everyone in the article is talking about long-term increases in sea level rise and flooding.
* a University of Miami study reporting that Miami Beach has seen a 200 percent increase in flooding in the last decade
* current (conservative) estimates predict a three-foot rise over the next 100 years
* The city is already elevating its roads
* the city’s new hydraulic pumps, installed as a result of initiatives by Miami Beach’s mayor Philip Levine
* Steps are being taken, buildings are being raised
* what they’re [developers are] doing now is elevating the building at a minimum of 3 feet
* The water will start coming up from the floor,” he [Alan Faena] said. “There’s not much we can do. That’s the reality.”
* the Rockefeller Foundation recently funded Miami's “resilience officer,” the first of many in what the foundation expects to be a global array to help organize various cities' responses
If the occurrence of the conditions required for flooding are happening at increased probability driven by climate change, then one could reasonably attribute increased flooding to climate change.
If only way to be sure is to wait for the data to show up 50-100 year baseline data for flooding, then by the time you act - all the costly infrastructure commitments have been made... it's another form of socializing the costs while privatizing the profits.
Climate change isn't the only thing that increases the probability. Over the long term they may eventually be the largest cause, but currently I would cite many, many other issues.
Sea walls, land use changes, water pumping, loss of wetlands all affect the severity of tides. All these things could be changed to avoid issues while completely ignoring climate change for now.... Yet they do nothing. Ocean bathymetry is extremely complex, messing with one thing on a shoreline effects everything around it. Just yelling "It's all climate change" is both stupid and dangerous. Trying to stop the shoreline from moving is stupid, expensive, and in the long term, dangerous.
Sure thing, all the other states you mention speak to the capacity of the shoreline to absorb some amount of water increase (from any source). Independently, if the frequency and intensity of flooding events is predicted to increase in the future, one would think that long term zoning regulations to preserve or increase the capacity of the shore to absorb flooding would be cheaper than, fix-it-quick with big infrastructure projects after catastrophic damage has already occured. That's why it's cheaper to address it now, rather than wait until the building policy completely breaks down.
The clear consensus is that AGW is real. That is a far cry from saying that there is a clear consensus that it must be dealt with ever, let alone that it must be dealt with in the near-term.
There's no consensus that it "must" be dealt with, however, there is a clear consensus that if we don't deal with it (which is a quite possible scenario) then places like Florida Keys will cease to be inhabitable within the next 50-100 years.
> There's no consensus that it "must" be dealt with
If you mean that there is no political consensus in the United States, yes, that's true beyond a doubt.
If you mean that there is no consensus among scientists and experts in the field, then that's wrong. There is and has been a clear consensus that we "must" act urgently.
Scientists have a clear consensus that if we don't do it, then we'll have certain consequences.
However, if we're looking at the actions of everyone who might actually deal with it, then there's a clear consensus that we're actually choosing to face the consequences instead.
"Must" implies a degree of certainty, a statement that we will have to deal with it one way or another, and thus we will deal with it - however, that doesn't seem to be the case here, it is quite plausible that we will choose to not deal with it properly. It would be nice if we acted urgently, but there's no "must" there - it's quite likely that we will not do so.
If we want to use the word "must" then it might be more appropriate to say that irreversible climate change is the thing that must occur, given the current global political 'climate'.
I generally agree, and don't want to bicker over the wording, except one important point ...
> if we're looking at the actions of everyone who might actually deal with it, then there's a clear consensus that we're actually choosing to face the consequences instead.
Very many are denying that climate change is happening, or falling back to denying the consequences, or falling back to saying there's nothing we can do about it.
At least from the political perspective, I feel that most of it is simply justification and rationalization.
After you've made a decision that for your country/company/party/economic group/whatever the desired course of action is to not work against climate change, then you still have to communicate and "sell" that decision to everyone else, and denying the consequences or saying that we can't do anything has much less backlash than openly saying "fuck you, got mine".
While it's also true that "It is difficult to get a man to understand something, when his salary depends upon his not understanding it!", I believe that most of the involved politicians understand the future consequences (at least the mid-term consequences to their particular area) quite well, but politic communication is about telling whatever will get your goals achieved the best, not about communicating your personal beliefs truthfully.
It's the same thing with jobs - can you imagine any politician telling to a distressed area/industry "no, your jobs are never going to come back" even if that's an obvious truth?
The above linked article does the same thing the OP does, that is makes a statement about Miami then points to flooding on Miami Beach. Miami is mainland and Miami Beach is a barrier island, yet the increased flooding is only ever claimed on Miami Beach the barrier island, ignoring the fact that the mainland is sea level but sees no increased flooding nor as kls points out there is no increased flooding in the Florida Keyes.
Personally, I didn't know about the Gulf El Nino issue kls pointed out, but there is no ignoring the lunar events (2016 Supermoon) and so it will be interesting to see if flooding begins to decline as the moon begins to move away from the Earth for a couple decades. Again the linked article is very clear the increased flooding is attributable to tide (lunar) events for the most part.
Like all articles it also fails to acknowledge that Miami was swamp turned into land that could be through engineering a massive canal/waterway system and Miami Beach wasn't originally a beach it is artificial, complete with manufactured sand. One thing to also keep in mind is the continued development of Miami Beach over this 10 year time period, which has also meant more recently the island lost land that used to soak up rain water like a sponge in lieu of asphalt that floods (compare this to Florida Keyes where much of the land is protected from development and continues soaking rain water). Again if this were a natural phenomenon caused by climate change as opposed to over development and tide events, Miami and the Keyes would see increase flooding as well but these studies appear to be limited to Miami Beach.
With respect, I see no basis for most of this comment. It reads like an attempt to find any reason but climate change, for which there is overwhelming evidence, and for which rising sea levels have been and are strongly likely to remain a consequence.
> the linked article is very clear the increased flooding is attributable to tide (lunar) events for the most part. ... it will be interesting to see if flooding begins to decline as the moon begins to move away from the Earth
That is not what the article says. The article does not at all attribute the increased tide height to lunar activity; the words "moon" and "lunar" do not appear in the text. Everyone says this is a long-term problem and they do not mention any possibility of improvement due to the moon.
> the island lost land that used to soak up rain water like a sponge
The water causing the floods is coming up through the ground from the sea, not coming down from the sky. Rain isn't an issue.
> if this were a natural phenomenon caused by climate change as opposed to over development and tide events, Miami and the Keyes would see increase flooding as well but these studies appear to be limited to Miami Beach.
What is that based on? The article explains the reason that Miami Beach is affected.
You are so right. We've allways had water come in on high tides. The risk is hurricanes and storm surge, that is why flood insurance is so high on miami beach. (BTW its feels like hurricane frequency is in a downtrend) I just purchased a place on the intercoastal waterway in miami beach after selling my palce in west broward burbs. Flood insurance is around $2500 per year. Windstorm/Homeowners is $4500. Burbs was like 350 per year for flood.
> The risk is hurricanes and storm surge, that is why flood insurance is so high on miami beach.
This nails it. Miami Beach real estate values will decline as soon as insurance companies throw up their hands and refuse to insure the losses. Can't insure, can't finance a property.
Citizens Insurance is the insurance of last resort in FL and is paid by taxpayers to deal with this situation. You can always get it. The best you can hope for is the rates go up enough for Citizens Insurance to make these properties less valuable. Don't hold your breath though. Relevant link: http://www.sun-sentinel.com/business/consumer/fl-insurers-so...
I live in a 130 year old house in Chicago. If you go in the basement, you can see the new foundation built on top of the old one when the house was raised, and how they added indoor plumbing at the same time.
That being said, even though Chicago had high-rises at the time, buildings were all pretty much held in place by gravity at the time. Raising them was just a matter of having enough jackscrews to support the building and making sure the building was raised evenly so that it didn't crack.
I suspect that the higher level of integration between modern buildings and their foundations probably means that it's going to be cheaper to just tear down the buildings and rebuild them. My best friend is a structural engineer, so it would be interesting to see what he has to say on the topic. If Miami is anything like Chicago, all the buildings are probably built on piles already, and burying them is one of the most time consuming and expensive parts of the construction process. If you could re-use the piles for a new building you might be able to get away with rebuilding buildings on the cheap.
I suspect raising the vast majority of buildings would still be eminently possible though. You see this all of the time in flood-prone areas already. The only difference is that you'd be adding fill up to your new front door.
Or maybe Miami will turn into a Venice-like romantic canal city, where travel will be done by jetski, tourism will flourish, and real estate prices will keep going up.
> they might be right on sea-walls, pumps and other mitigation methods
Unfortunately, Florida will have an even harder time than most in mitigating rising sea levels, because the ground is heavily porous limestone. The sea can literally bubble up from below through the ground, and nothing short of dropping a state's worth of granite will help once the sea level rises high enough.
Miami should prepare to become America's Venice in 100 years.
The inflection point, if there is one, is likely a decade or more away. Real estate losses will be unique to each area. So you're more likely to see a smattering of "Hurricane Katrina Moments" than a wholesale reversal in the financial markets a la 2008. Deep out of the money options on overexposed instruments is a plausible position to take here, especially during the ~6 week hurricane season.
Another thing to note is that it costs money to short -- you are borrowing the shares after all, so you need to pay interest on the loan. This makes a multi-year position shorting select REITs troublesome.
The position I'm taking (roughly) is to hold oceanfront property with excellent sea-level protection. Think cliff-front, not beach-front. A different play? Construction companies specializing in sea level mitigation.
Cliff-front property may have its own issues. For example, the cliff parts of Cape Cod are eroding by an average of 3 feet per year according to http://woodshole.er.usgs.gov/staffpages/boldale/capecod/ques... -- and that link claims that sea level rise would be expected to speed up erosion.
Of course if you pick sturdier cliffs you might be better off.
Before you short, read the Big Short and imagine yourself as Michael Burry. Very often you can be short, right, and lose your pants because markets are slow to recognize things that they are paid to ignore.
cjlars already brought up a similar strategy with less sensitivity to sea level changes and less sensitivity to interventions.
Maybe the best climate change hedge is investing in low carbon power production. (incrementally) Good for the climate, benefits if things go worse than expected.
No, that's exactly the problem. If you're betting on the market's irrationality fixing itself, you better be able to weather the storm of however long that takes.
The general problem with attempting to profit from global warming is that you end up having to short the entire financial system, and it's tough to make money from the idea of "everything stops working".
Realistically, both Canada and Russia are countries likely to be net beneficiaries of global warming. Taxes won't have to be increased as much to deal with the effects; more taxes will be generated from increased agricultural productivity; and heating costs will decrease. Must be some way to hedge your personal losses from global warming with investments there.
Easy. Have someone on Wall Street create a derivative for you that increases in value as Miami Beach real estate value declines, and be willing to pay the premium for decades. If you wanted to speed things up, find a way to force saltwater into the water table faster without being caught by regulatory agencies.
Thats pretty easy for an institution to do. You would simply find the most exposed developments with the highest credit ratings and buy CDS on their bonds. The issue is that if this is not a crash (e.g. prices rapidly collapse triggering defaults) its very hard to monetize.
> While a destructive fire was not unusual for the time, instead of rebuilding the city as it was before, the response of the city leaders was to make two strategic decisions: first, that all new buildings must be of stone or brick, as insurance against a similar disaster in the future; and second to regrade the streets one to two stories higher than the original street grade. Pioneer Square had originally been built mostly on filled-in tidelands and, as a consequence, it often flooded. The new street level also assisted in ensuring that gravity-assisted flush toilets that funneled into Elliott Bay did not back up at high tide.
The answer to this question is quite simple, and the two choice sentences from the article:
"And their time frame is what, five years? How do you reconcile those two things: It’s a 100-year problem and a five-year investment cycle." The answer is simply that the private equity firm does not account for the long term, but that the city of Miami Beach will have to—soon.
And that is fundamentally what makes climate change so difficult to deal with. The economic incentives, which only really look 5-10-15 years out, can't respond to consequences that are 50-100 years out, and by then it's really too late.
Exactly. It reminds me of the "I'll be gone, you'll be gone" mentality of Wall Street in the mid-2000s. As long as these new developments are sold to buyers/investors now, the risk is transferred away from the developers and their incentive to build remains. And the demand isn't going to dry up any time soon with tons of cash from South America coming into Miami every day.
There will be a day of reckoning soon when the next major hurricane hits and all of these new developments are damaged beyond repair. Miami got very lucky with Matthew a few months ago, but the next one is really going to hurt today's buyers.
> And that is fundamentally what makes climate change so difficult to deal with. The economic incentives, which only really look 5-10-15 years out, can't respond to consequences that are 50-100 years out, and by then it's really too late.
On the global level (let's say 50-100 years out), do you think we as a species are headed toward an "Easter Island" effect, where we "whistle past the graveyard" and assume everything is "fine" - until it isn't - and at that point we can't do anything and have to deal with the potentially existential consequences?
Very much so. We still have the foot hard on the gas. We haven't even got 10 years of business as usual.
The conversation at the moment is about power, but moves to get off fossil are, globally, token. The conversation hasn't got to agri-business, deforestation and meat especially beef, or population, or water. Forests are still being felled and burnt for cattle and palm oil, new fracking is still reported as opportunity for jobs and profit.
I'm starting to arrive at the belief that my children's best hope is being amongst the 100m or so left.
Assuming the market is working* this should all be factored in. Yeah, economic incentives might be looking at the next financial quarter, but when you finance a building it's amortized over a number of years (most home loans are 30 years, I figure commercial or industrial are longer). Insurance is required to secure financing and insurance should be factoring this in since the whole point is that they're hedging risk and planning for 1 in 100 catastrophes.
On the flip side, major hurricanes have bankrupted insurance companies and left property owners without the benifits they paid for. The two solutions I see are larger (more diversified) insurance companies or the government stepping in to regulate.
Almost no 100-year stakeholders exist. Real property owners will have the most to lose but even they have a much shorter time horizon. The solution is probably for some combination of Federal and State led remediation funded by raising the local property taxes by an extreme amount (200-300%) matched by Federal funds. You have to inflict enough pain on the locals that the rest of the country won't complain when they are helped (see Detroit). Whether this is politically feasible (or even Constitutional) I don't know.
Investors assume that Miami is too big to fail. The government bailed out (most of) the financial firms in 2008. Bailing out (figuratively and literally) flooding cities will be a popular plan when the time comes.
Just as with the housing collapse, the question will be whether the government bailout will successfully resolve the crisis.
Exactly. The answer is moral hazard. As long as it's possible to keep Miami dry, post-Katrina New Orleans basically guarantees that Miami and similar will see a massive influx of money to rebuild. Once these properties are physically/financially underwater, the corporate bailouts effectively guarantee that they'll be made whole-enough. Meanwhile, they get to make money off of the buildings.
They're counting on the city, state and national government to bail them out at some point. Not a literal money bailout, but a "save the citizens" campaign to build massive dykes, move buildings or invest in pumps.
Why is humanity still pumping unsustainable levels of greenhouse gases into the atmosphere when all the science points to that being a road that leads to catastrophic consequences which we can't predict?
First, this is a classic example of tragedy of commons - if you lower emissions, then you bear all the costs but a tiny fraction of the benefit;
Second, even if coordination can be solved, by and large the groups/areas that can make a meaningful reduction are not the groups/areas that will bear most of the consequences, there's no such thing as a single, aligned direction of interest/benefit for humanity.
For what it's worth, I've given up my car (I live within easy biking distance of work), live in a small townhouse (heating costs $20/month in the winter thanks to good insulation and neighbors eliminating heat loss to the sides). I purchase few goods, and try to keep most things as long as possible. Most of my entertainment/shopping is within walking/biking distance. I try to limit waste and compost/recycle everything I can.
My electrical usage is so low that I don't think installing solar would be a net win in carbon emissions.
Based on various calculators, my carbon footprint is about half that of a typical American. Now can I ask for a 28% decrease in carbon emissions?
I'm vegan. I ride public transit when possible, and moved next door to my job so I don't need to commute on a daily basis, I buy used whenever possible, and try not to buy stuff I don't need. I take carbon into consideration when making holiday plans (a few plane rides can double a persons carbon footprint). I compost. Future changes I'm trying to make include going to local farmers market and growing more of my own food, switching to solar power. But, realistically, I'm only one person. If everyone went vegan today, gave up cars (for bikes) and planes (for electric trains), and we started growing 51% of our food locally we'd be well on our way to meeting carbon emission reduction goals. The technology has been around for awhile. The will to make the choices has not. Which is why, I'm a pessimist on these issues.
Why would developers care? They build, and they sell the units and move on. They are not long-term holders, and they are not even using their own money. You could tell them Miami will be nuked ten years from now and they will still develop new properties.
I wonder if this could be considered an opportunity. Let's say for the sake of argument that Miami Beach will be gone 20 - 50 years, subsumed by rising sea levels.
Can you build a structure now, while it is above sea level, that in a post sea level rise will be really nice? First suspend the building on pylons that are sunk all the way down to bedrock, second design it so that as an "island" it has great access, an easy Marina attachment, a helipad on top (for example). And then make it reasonably self contained (internal shops for transacting supplies, and entertainment). And finally give it oil platform like stamina against hurricanes and storms.
Sort of planning for a post apocalyptic refuge today.
How could such a thing be financed? If your value proposition is 'I have this apartment for sale/rent that's twice as expensive as the others, but in 20 years time you'll have dry feet' - I'm not sure who would buy such a thing. Preppers would move to the boondocks in Montana anyway.
If you use pozzolan concrete reinforced with basalt, then the reinforced concrete part will last.
There is a lot of research on building a "cloak of invisibility" against ocean waves. Earliest I saw about this was back in the 1990's or early 2000's I think, with some Japanese researchers who were the first I recall proposing what is now commonly cited as a discovery in 2008 by UK and French researchers [1].
It would be interesting if the building design can take the large wind loads and use the energy to create and store hydrogen, perhaps re-direct the wind to anchor the building even more if that is a structurally sound approach.
That's my bet. Some time in the coming fifty years we will lose the first city to rising water. There will be attempts at mitigation, but they will fail either for lack of money or know-how. And after that we will think differently about this problem.
It could be Miami. It's certainly low-lying enough, and big enough to count. But it's also in the United States, which has a lot of money to throw at problems. Some city in a poorer country would be a better bet.
Galveston would have disappeared decades ago, until they lifted it and built a seawall. We throw a lot of money at the problem of the ocean. The issue is, sea level rise or not, the ocean will always win unless a constant stream of money is continually pumped into defense.
It would be interesting to know if this type of behavior would continue if the federal government stopped subsidizing flood insurance in these areas: http://www.pbs.org/wgbh/frontline/article/can-femas-flood-in...
I don't really understand why tax dollars are being spent on this type of thing.
A: Because lots of available capital drives dumb real estate decisions. Always.
Real estate is unique because it's value is realized over long periods of time and it's easy to get mortgages.
In my area, they're building massive gluts of apartments and condos. The dumb money -- mostly smaller regional banks trying to break into commercial lending are leading the deals, and the bigger or more sophisticated banks stay away.
That's a big reason why you have extreme boom/bust cycles, special tax rules, etc.
Miami speaks money; the other languages are secondary.
The wealthy very much like Miami and even if rising tides make Miami Beach uninhabitable then at worst it's a hit to their portfolios, not a collapse of their assets.
There's a sucker born every minute. I could sell any property in Miami with ad copy like 'One investment designed to make a liberal's head explode.' FEC records for this election are going to be a goldmine for fraudsters.
Miami real estate (and other low lying shorefront) isn't quite at that 'oh crap' moment yet. While the evidence for CO2 driven rising sea levels is clear to me, there are plenty of financiers from the previous generation for whom it isn't. And even if they're wrong on global warming, they might be right on sea-walls, pumps and other mitigation methods. The Raising of Chicago lifted the entire city up 3-6 feet with merely 1850s technology, so it's not as if we can't solve Miami's sea level issue with sufficient investment. The issue is who foots the bill, how large it is, and what neighborhoods are left to the sea.