Florida and the Carolinas, along with Houston and surrounding Texas counties, have gained millions of new residents seeking to trade snow and monotony for sun and water. Coastal state governments have by-and-large encouraged this immigration and the resulting construction, paving, and deforestation because new residents pay taxes and developers contribute to political campaigns.
This is turning out to be a huge, perhaps insanely expensive mistake, similar in a lot of ways to out-of-control public pensions: A short-term benefit that produces long-term costs – i.e., an unfunded liability – which accumulates more-or-less secretly until something happens to turn an accounting issue into a cash flow nightmare.
Consider Houston. Over the past few decades hundreds of thousands of people have moved in, and developers have accommodated them by paving over much of the land that used to absorb floodwaters during storms. When hurricane Harvey hit in 2017, the city found itself underwater for days, with damages totaling $125 billion. Much of this was covered by tax payers via federal flood insurance.
Now fast forward to today’s North and South Carolina, also very popular destinations for Americans from colder climes, and the scene of rapid construction of homes, hotels and stores within a few miles of the ocean. In the following article, the New York Times lays out the downside of this kind of short-sighted public policy.
Twenty-nine years ago this month, Hurricane Hugo barreled ashore just north of Charleston, S.C., a category 4 storm with maximum winds estimated at 140 miles an hour and the highest storm tide ever recorded on the East Coast.
Here is where people lived in the region in 1990. Hugo was the nation’s costliest hurricane ever at the time, with damages of about $7 billion.
Over the next three decades, an estimated 610,000 homes were added within 50 miles of the coastline, according to my research.
Most will be affected by Hurricane Florence, the monster storm that is advancing on the coast, with landfall expected Friday morning.
Among the many crucial quotes from the above article: “In fact, according to research by me and colleagues, the root cause of the country’s escalating number of weather- and climate-related disasters is not necessarily a rise in the frequency or intensity of these events but the increasing exposure and vulnerability of populations that lie in their path.”
In other words, you don’t need climate change to make the policy of encouraging people to move to hurricane alley a bad idea. There have always been – and always will be — monster storms, so a continuation of historically normal weather guarantees the occasional Cat-5 direct hit on the Eastern Seaboard. The more people we put there, the higher the cost of cleaning up afterward.
And since we haven’t had a direct hit in quite a while, no one seems to understand just how much all those extra buildings will cost to replace. In this sense, Cat-2 Hurricane Florence is a taste of things to come, but just a taste. The main course is the inevitable “big one” that hits Miami, after which we’ll finally be able to calculate this latest unfunded liability.
The SPDR S&P Insurance ETF (KIE) closed at $32.39 on Friday, up $0.34 (+1.06%). Year-to-date, KIE has gained 5.97%, versus a 9.44% rise in the benchmark S&P 500 index during the same period.
This article is brought to you courtesy of DollarCollapse.com.