When sea level rise becomes a certainty, not a possibility

The pages near the front and back of certain glossy magazines are filled with ads for luxurious condominiums, many in New York and south Florida. The photos of gleaming towers with breath-taking waterfront views make me wonder what it would be like to live in such luxury.

But they also make me wonder: What are they thinking? Do they not know about rising oceans? Do they worry about the insurability of their glamorous digs in an era of rising oceans?

Obviously not. For, even though warnings about flooding grow grimmer by the month, it’s easy to ignore them if you don’t see the water lapping at your door now. Denial is rampant, judging by the boom in waterfront construction. Developers seem confident that they’ll get a handsome return long before the waters rise. Buyers seem sure it won’t happen before their 30-year mortgage is paid off. By then, they’ll be ready for assisted living, and it becomes the heirs’ problem.

But what if the threat is more imminent? What if the Federal Emergency Management Agency raises its flood insurance rates to actuarially-sound levels – and your premium becomes the size of a mortgage payment? What if a private insurer refuses to write policies for a neighborhood – or an entire community? What if a mortgage broker declines to write loans for homes in threatened neighborhoods?

Ask the residents of Larchmont-Edgewater, Va. According to an article in the April 16 New York Times, this Chesapeake Bay community is living the nightmare of unsustainable waterfront living. The article by Brooke Jarvis highlights many of the points that will be discussed in detail at an upcoming conference in St. Petersburg, Insuring Uninsured Risk: Floods, Sea Level Rise and Natural Catastrophes. Co-sponsored by the Florida Association of Insurance Reform and St. Petersburg College, the conference will be at the Vinoy, St. Petersburg Resort and Golf Club, 501 5th Ave. NE. Registration is $195 per person.

Larchmont-Edgewater is losing land elevation due to subsidence even as sea levels are rising faster than anywhere else on the Atlantic Coast, the article states. Water levels are as much as 18 inches higher than a century ago, and they are still rising. Homeowners, who face regular flooding events, are seeing their property values halved even as they must pay for costly construction to mitigate flood damage.

Without insurance, of course, none of today’s construction on flood-prone shores would have been possible. Much of the risk has been absorbed by the National Flood Insurance Program (NFIP), which is administered by FEMA. That funding is up for a reauthorization vote in September. In 2013, when the Biggert-Waters Act sought to raise FEMA rates to something close to the actual risk of underwriting, howls of protest at soaring premiums forced the feds to back off. But the NFIP is billions of dollars in debt to the Treasury, and the feds’ compassion for folks living in flood-prone areas may be waning. Roy Wright, NFIP administrator, told Jarvis that it may come down to “where we make an offer of mitigation to a homeowner, and if they do not choose to take it, we don’t renew their policy.”

Frank Nutter, president of the Reinsurance Association of America, put it bluntly: “Constant risk — that’s not what insurance is about.”

So, the gleaming towers going up on fragile coastlines may still be good investments. But for how long? The author quotes Sean Becketti, chief economist for Freddie Mac, as speculating whether coastal property will become uninsurable gradually, as the life expectancy of homes diminishes, or precipitously: “the first time a lender refuses to make a mortgage on a nearby house or an insurer refuses to issue a homeowner’s policy.”

There you have it. Not whether, but when. For the sake of Florida’s economy, we can only hope it will be gradual, and that we will use the interval to wisely prepare for the inevitable. The May 24 conference will offer insights on how. To register, go to solutions.spcollege.edu and click on the conference link.

David Klement is executive director of the Institute for Strategic Policy Solutions at St. Petersburg College and former editorial page dditor of the Bradenton Herald.

This story was originally published May 4, 2017 at 9:15 AM with the headline "When sea level rise becomes a certainty, not a possibility."