An increasing proportion of the world’s population and economic assets are located in coastal areas. At the same time, climate change is raising sea levels and is expected to increase the intensity of coastal and terrestrial storms. These colliding trends will expose societies to escalating coastal hazards outside historical experience. Nonetheless, the desire to live, work and play at the coast continues to drive development in hazardous locations around the world.
Coastal development built to withstand 1-in-100 year events is likely to become uninsurable, and potentially uninhabitable, within the next few decades, as rising sea levels dramatically increase the impacts of extreme events.
Unabated economic development at the coasts suggests that the risk of coastal disasters is underpriced by the market. As a more sophisticated understanding of coastal hazards under climate change develops, and this information is accepted by market participants, the value of coastal property is likely to fall.
Sea level rise is effectively imposing a time limit on the use of coastal property. Under escalating coastal hazards, coastal property effectively converts from freehold to leasehold land – except that the lessor is not a person or organisation but the nature itself. The maximum term of the lease is becoming the period of safe occupancy.