Coastal armoring and sinking property values: the case of seawalls in California

Abstract

Rising sea levels necessitate careful consideration of diferent forms of coastal protection but cost-beneft analysis is limited when important non-market social costs have not been measured. Seawalls protect individual properties but can potentially impose negative externalities on neighboring properties via accelerated beach loss. We conduct a hedonic valuation of seawalls in two coastal California counties: San Diego and Santa Cruz. We fnd no strong evidence to suggest that the presence of a seawall is positively correlated with the value of the home protected. However, we fnd that seawalls are strongly negatively correlated with the value of neighboring properties in Santa Cruz but not in San Diego county, suggesting that the efect of seawalls depend on certain geographical attributes. Our results are robust to accounting for the publicgood nature of locational attributes and the potential spatial dependence of housing prices. Simulation reveals that doubling the extent of seawalls in San Diego and Santa Cruz could reduce property tax revenues by $7 million and $54 million, respectively