Significant Financial Losses From Coastal Erosion Anticipated Along U.S. Coastlines

Within the first few hundred feet bordering the Nation’s coasts, property owners face as large a risk of damage from erosion as they do from flooding.

Approximately 25 percent of homes and other structures within 500 feet of the U.S. coastline and the shorelines of the Great Lakes will fall victim to the effects of erosion within the next 60 years, according to a study released today by the Federal Emergency Management Agency (FEMA).

Roughly 1,500 homes and the land on which they are built will be lost to erosion each year, on average, for the next several decades. Costs to coastal property owners will average $530 million per year. Additional beach nourishment or structural protection might lead to lower losses; additional development in the most erosion prone areas will lead to higher losses.

Especially hard hit will be areas along the Atlantic and Gulf of Mexico coastlines, which are expected to account for 60 percent of nationwide losses.
The Atlantic and Gulf coasts account for 45 percent of the U.S. coastline and they are home to 63 percent of the structures within 500 feet of the shoreline. The nation's highest average erosion rates - up to six feet or more per year - occur along the Gulf of Mexico coastline. The average erosion rate on the Atlantic coast is about two to three feet per year. However, actual erosion rates can vary widely from one location to another and from one year to another. A hurricane or other major storm can cause the coast to erode 100 feet or more in a single day.

Costs to U.S. homeowners will average more than a half billion dollars per year, and additional development in high erosion areas will lead to higher losses, according to the report

At current enrollment levels, the National Flood Insurance Program will pay $80 million per year for erosion related damage, about 5 percent of today’s premiums. Total losses will rise with hoped-for enrollment increases.

Today’s property values within the areas most susceptible to coastal erosion have been lowered by a total of $3.3 billion to $4.8 billion nationwide as a result of erosion, a loss of about 10 percent.

Most of the damage from erosion over the next 60 years will occur in low-lying areas also subject to the highest risk of flooding. Some additional damage will also occur along eroding coastal bluffs.

Although certain types of erosion damage are not eligible under National Flood Insurance Program rules, most erosion-related losses sustained by policyholders is reimbursed by the program. However, erosion damage is not fully reflected in flood insurance rates; current rates are primarily based on flood risk alone.

Thus erosion losses will be subsidized by policyholders in non-eroding areas or general taxpayers.

To fully reflect risk, insurance rates in the highest risk coastal areas must be, on average, twice today’s rates.

Rate increases could be spread uniformly to offset soil erosion payout claims.
It would cost about $44 million for FEMA to identify, map, disseminate and maintain information on erosion hazards nationwide.

Assuming that enrollment in the federal flood insurance program holds steady, NFIP's tax payer payout for erosion-related losses over the next few decades is likely to be about $80 million per year.
If all currently empty lots in areas most susceptible to erosion are built on, damage from erosion would rise by roughly $100 million per year for the value of the structures alone.

Development density in several of the high-risk coastal areas increased by more than 60 percent over the last 20 years. Roughly 15 percent of this increase appears attributable to the influence of the National Flood Insurance Program.

The Heinz Center-Evaluation of Erosion Hazards. 2000