Thursday, January 3, 2013

San Francisco Bay: Preparing for the Next Level

I would highly recommend reading this important document prepared by the Dutch engineering firm Arcadis.  (See my previous blog regarding investing in Dutch engineering firms.  The project team from Arcadis is listed in the report - - very Dutch!!!).

In many coastal communities, climate change and rising sea levels will result in a binary decision point - - defend or retreat.  Keep in mind retreat or abandonment and moving to higher ground has a cost outlined below:
  • Accelerated amortization/write-off of structures and infrastructure.
  • Write-off of the underlying real estate, something that is rarely done on balance sheets now.
  • Significantly increased insurance costs.
  • A dwindling tax base.
  • As things deteriorate, the increasing cost of defensive measures such as seawalls, and then the costs of remediation and repair as things get destroyed, prior to the decision to abandon.
  • The cost of relocating, not just individual buildings and infrastructure, but entire communities.

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