Value of oceanfront homes likely to plummet if federal sand subsidies disappear

Besieged by rising seas and ever more violent storms, many East Coast communities now slow the erosion of their beaches by reinforcing them with massive amounts of sand.

The grains, often paid for or subsidized by the federal government, can come from inland sand pits or the ocean floor. But what happens to waterfront homes if the federal government no longer foots the bill for sand?

The value of many oceanfront homes on the East Coast would suffer a massive drop, tantamount to the bursting of an economic bubble, say researchers from three universities in a new study published in the journal PLOS One. In areas of North Carolina and New Jersey, where the current rate of beach erosion can be four times the historical average, property values could drop 17 percent for towns with high property values and as much as 34 percent for towns with low property values.

“For coastal properties, a significant chunk of the property value comes from nourishment cost -- the federal government subsidizes so much of it,” said Dylan E. McNamara, associate professor of physics and physical oceanography at the University of North Carolina Wilmington and lead author of the study. “Where the sand goes is not just a physical problem, it’s also an economic issue."

In New England, much of the sand brought in to widen eroding beaches is privately purchased or is a byproduct of dredging to clear navigational channels. But as erosion hits hard areas of Plum Island, the South Shore and Cape Cod, some residents have called on the government to provide more sand to shield their own homes, as well as the communities and infrastructure behind them.

The researchers used a model based on North Carolina data to estimate impact of the sudden removal of federal nourishment subsidies. However, they said their findings are applicable to most communities up and down the East Coast (with the exception of urban areas like Atlantic City or towns located along rockier shorelines). Their model also incorporates a number of complex factors including sea level rise and increased storminess, factors very closely tied to the value of beachfront homes.

If federal subsidies disappeared suddenly 10 to 15 years from now, at a time with even higher sea levels, the drop in property values "could be even more dramatic," according to the researchers.

"The vulnerability of these coastal properties is increasing, demand for resources required is definitely increasing...and holding the coastline in place requires more and more human intervention," McNamara said. "It's a daunting future, to be sure."

Recent data on subsidies is difficult to come by but according to numbers from the National Oceanic and Atmospheric Administration, the federal government has historically footed about 66 percent of the cost of beach nourishment projects, spending around $787 million on nourishment between 1995 and 2002.

Costs are increasing with the rising seas, and members of Congress has floated the idea of eliminating nourishment subsidies. The sand used to fortify beaches has also become something of a precious commodity, shockingly expensive and difficult to mine and move. Disputes over who gets sand and who will pay for it are so contentious that experts have dubbed them “the sand wars.”

In 2013, the New England Center for Investigative Reporting calculated that over a ten-year span, more than $40 million in federal, state, and local funds have been spent to fortify Massachusetts’ public beaches. The public Winthrop Beach, for instance, is currently in the middle of a restoration project that will cost state taxpayers more than $25 million.

McNamara and his co-authors are still hesitant to make any pointed policy recommendations based on their predictions but say that should federal subsidies for beach nourishment prove unsustainable, gradually winding them down, rather than removing them in “one fell swoop,” is a healthier tactic.