Abstract
Accelerated coastal erosion and elevated risks of flooding due to global warming put enormous burden on the ecosystems and economic health of coastal communities. Optimal policies to lessen these negative impacts require an estimation of their costs and benefits. The aim of this paper is to calculate the costs of beach erosion and flood risk through the valuation of property prices in Hilton Head Island, a barrier island located in South Carolina, USA. Spatial lag hedonic pricing was introduced in order to account for spatial autocorrelation in the dataset. The results show that properties that are located within the zone of high, or very high, flood risk experience a 15.6% reduction in value. The implicit price of being located close to an eroded beach is approximately 26% of the price of an oceanfront property. However, this negative impact on property value diminishes with distance from the shoreline.
Highlights
Coastal living has been preferred by many Americans because of sandy beaches and warmer climate
Half of the properties that are in close proximity to the coastline are in areas with high or very high flood risk
A significant portion of the Hilton Head Island (HHI) beaches has been eroded at a faster pace due to sea-level rise
Summary
Coastal living has been preferred by many Americans because of sandy beaches and warmer climate. According to National Oceanic and Atmospheric Administration’s (NOAA’s) estimates, population in coastal counties increased by approximately 40% from 1970 to 2010. Hilton Head Island (HHI), a foot-shaped barrier island located in Southeast. South Carolina, USA, experienced a similar population increase of almost 18% from 2007 to 2017. In 2019, 2.68 million travelers visited HHI, contributing a total of. Protection of beach and natural amenities is critical to maintain and improve economic and environmental conditions that have been leading to rapid population growth in coastal towns and cities. Accelerated shoreline changes and elevated risks of flooding are some of the many outcomes of sea-level rise due to climate change
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