Climate change resilience could save trillions in the long run – but finding billions now to pay for it is the hard part

Is your city prepared for climate change?

The latest National Climate Assessment paints a grim future if U.S. cities and states don’t take serious action to reduce greenhouse gas emissions.

The bottom line is that the costs of climate change could reach 10 percent of the entire U.S. economy by the end of the century – or more than US$2 trillion a year – much of it in damage to infrastructure and private property from more intense storms and flooding.

Cities can greatly reduce the damage and costs through adaptation measures such as building seawalls and reinforcing infrastructure. The problem is such projects are expensive, and finding ways to fund the cost of protecting cities against future and uncertain threats is a major financial and political challenge – especially in places where taxpayers have not yet experienced a disaster.

I’ve been part of a team that has been evaluating options for protecting Boston, one of America’s most vulnerable coastal cities. Our analysis offers a few lessons for other cities as they begin planning for tomorrow’s climate.

A woman surveys the remains of a home destroyed by wildfire in Napa, California, in 2017. Reuters/Jim Urquhart

Investing in adaptation

A team of scientists from 13 federal agencies contributed to the fourth U.S. National Climate Assessment, which recently laid out the stark threats Americans face from sea level rise, more frequent and intense storms, extreme precipitation, and droughts and wildfires.

For example, the report notes that coastal zone counties account for nearly half of the nation’s population and economic activity, and that cumulative damage to property in those areas could reach $3.5 trillion by 2060.

The good news is that investing in adaptation can be highly cost effective. The National Climate Assessment estimates that such measures could significantly reduce the cumulative damage to coastal property to about $800 billion instead of $3.5 trillion.

The report does not, however, examine the complex problems of implementing these adaptation solutions.

The adaptation devil is in the details

The Sustainable Solutions Lab at the University of Massachusetts Boston has been closely involved with its host city and local business and civic leaders in devising such climate adaptation strategies and figuring out how best to implement them, including a study I led on financing investments in climate resilience. Our work identified a series of hurdles that make financing such projects difficult.

One key problem is that while public authorities – and taxpayers – will ultimately bear the cost burden of coastal protection, the benefits mostly accrue to private property owners. Higher property taxes or new “resilience fees” will be on the table – and unlikely to be politically popular.

Another problem is that resilience investments primarily prevent or reduce future damages and costs but don’t create much new value, unlike other public investments such as toll roads and bridges. For example, an investment in a sea wall might prevent property prices for coastal homes from falling or insurance premiums from rising, but it won’t generate any new cash flows to defray the costs for the city or homeowner.

City officials are working on ways to protect Boston Harbor from the effects of climate change. Richard Cavalleri/Shutterstock.com

Beware the big fix

In a separate study, we examined the feasibility of building a four-mile barrier across Boston Harbor with massive gates that would close if major storms threatened to flood the city.

We estimated that the project would cost at least $12 billion and could take 30 years to plan, design, finance and build. Ultimately we concluded it was unlikely to be cost effective and urged city officials to abandon the idea.