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1 PROGRESS REPORT REPORT PERIOD: 2/1/2014-1/31/2015 PROJECT NO: 2014-R/P-NERR-14-2-REG TITLE: Coastal Hazards and Northeast Housing Values: Comparative Implications for Climate Change Adaptation and Community Resilience PRINCIPAL INVESTIGATOR: Robert J. Johnston AFFILIATION: George Perkins Marsh Institute, Clark University :: STUDENTS SUPPORTED Holland, Benedict, Clark University, Economics, status:new, no field of study, no advisor, degree type:phd, degree date: , degree completed this period: No :: CONFERENCES / PRESENTATIONS Johnston, R.J., B. Holland, C. Makriyannis and A. Whelchel Economics of Climate Change: Tradeoffs in New England Coastal Management. Coastal State Lecture Series. University of Rhode Island. February 25., SG-sponsored, 50 attendees, Johnston, R.J The Economics of Coastal Vulnerability and Adaptation: Asking the Right Questions. Keynote Address. Climate Summit III - Collaborating for Solutions: Choices Ahead. Great Bay National Estuarine Research Reserve. Greenland, NH. April 10., public/profession presentation, 100 attendees, Johnston, R.J., The Economics of Coastal Vulnerability and Adaptation: Choices and Tradeoffs. 2nd Annual Cape Coastal Conference: Linking Science with Decision Making. Waquoit Bay National Estuarine Research Reserve (WBNERR), Waquoit, MA. June 6., public/profession presentation, 150 attendees, :: ADDITIONAL METRICS P-12 Students Reached: P-12 Educators Trained: Participants in Informal Education Programs: Acres of coastal habitat protected, enhanced or restored: Annual Clean Marina Program - certifications: Volunteer Hours: Resource Managers who use Ecosystem Based Approaches to Management: HACCP - Number of people with new certifications: :: ECONOMIC IMPACTS No Economic Impacts Reported This Period
2 :: SEA GRANT PRODUCTS No Sea Grant Products Reported This Period :: HAZARD RESILIENCE IN COASTAL COMMUNITIES No Communities Reported This Period :: ADDITIONAL MEASURES Number of stakeholders modifying practices: Sustainable Coastal Development # of coastal communities: :: PARTNERS Partner Name: Coastal Adaptation Workgroup (NH), type: Other, scale: Regional Partner Name: Great Bay National Estuarine Research Reserve, type: Government, scale: Regional Partner Name: New Hampshire Sea Grant College Program Partner Name: Rockingham (NH) Planning Commission, type: Government, scale: Regional Partner Name: Sea Level Adaptation Working Group (ME), type: Other, scale: Regional Partner Name: Southern New Hampshire Planning Commission, type: Government, scale: Regional Partner Name: The Nature Conservancy, type: NGO, scale: International Partner Name: University of New Hampshire Cooperative Extension, type: Academic Institution, scale: Regional Partner Name: Waquoit Bay National Estuarine Research Reserve, type: Government, scale: Regional Partner Name: Wells National Estuarine Research Reserve, type: Government, scale: Regional
3 :: IMPACTS AND ACCOMPLISHMENTS Title: Developed improved methods to control for confounding effects in property value models Type: accomplishment Description: The new property value matching models developed by the project allow the effect of coastal risks and adaptations on property values to be distinguished from effects of confounding factors such as coastal amenities. This is important because the two are often correlated (e.g., homes closer to the coast and/or with coastal views are more likely to be at greater risk of flooding, ceteris paribus). If not corrected, this problem leads to imprecise or sometimes biased estimates, depending on model specification. This is a common problem in the published literature, leading to misleading estimates of the effect of coastal hazards and adaptations on property values. The project has developed new methods that will allow the effects of coastal hazards and adaptations on property values and tax bases to be estimated cleanly and precisely, apart from confounding effects and potential model misspecifications. Recap:none Comments: none Related Partners: none :: PUBLICATIONS No Publications Reported This Period :: OTHER DOCUMENTS No Documents Reported This Period :: LEVERAGED FUNDS No Leveraged Funds Reported This Period
4 PROGRESS REPORT TITLE: Coastal Hazards and Northeast Housing Values: Comparative Implications for Climate Change Adaptation and Community Resilience PRINCIPAL INVESTIGATOR: Robert J. Johnston AFFILIATION: George Perkins Marsh Institute, Clark University ASSOCIATE INVESTIGATOR: Klaus Moeltner AFFILIATION: Department of Agricultural and Applied Economics, Virginia Tech ASSOCIATE INVESTIGATOR: Christine Blinn AFFILIATION: Dept. of Forest Resources and Environmental Conservation, Virginia Tech ASSOCIATE INVESTIGATOR: Christine Feurt AFFILIATION: Wells National Estuarine Research Reserve REPORTING PERIOD: February 1, 2014 to January 31, 2015 REPORT NARRATIVE Project Summary Chief among the information needs to enhance coastal hazard adaptation are assessments of economic outcomes and policy implications. The project will develop and apply rigorous social science methods that, when integrated with natural science data and projections on coastal vulnerability, will enable stakeholders and policymakers to evaluate property value and tax base impacts of climate change adaptation across Northeast states and communities. The result will be heretofore unavailable information quantifying the economic consequences of coastal vulnerability and adaptation. Beneficiaries of the project include coastal adaptation work groups and government organizations; target communities; project partners seeking to better inform coastal adaptation; and policymakers/stakeholders. Project results will enhance the ability of communities to choose adaptations with intended and desirable economic consequences. First, results will enable policymakers and the public to understand the effects of current hazard vulnerability on property values and the tax base, replacing unsupported claims with reliable empirical evidence. Second, the project will provide information that policymakers can use to forecast property value and tax base implications of alternative adaptation measures. Third, future scenarios mapping will provide information to support community dialogue and visioning. The project builds upon extensive prior work of the investigators coordinating natural/social science data to forecast economic outcomes and using results in partnership with stakeholders and policymakers to inform management. Specific project objectives are: 1. Select final case study communities in four Northeast regions (coastal ME, NH, MA and CT) in coordination with project partners and community officials, and to engage these communities/partners throughout the project. 2. Create GIS datasets for each community on (a) property values and tax base, (b) parcel and structure attributes, (c) parcel-level coastal hazards and vulnerability, (d) relevant public and 1
5 private adaptations, (e) other mitigating factors and determinants of property values (e.g., land use and land cover, neighborhood characteristics). 3. Adapt the theory and econometrics of property-matching models for robust estimation of property value and tax base responses to coastal hazards, public/private adaptations, and other mitigating factors in case study communities. 4. Estimate models that characterize the impact of hazard vulnerability and public/private adaptations on property values and tax base. Evaluate implications for the effect of coastal hazards and adaptations on property values and tax base, incentives facing developers and homeowners/buyers, and community resilience. 5. Generate comparative projections of property value and tax base impacts, through the coordination of model results with future coastal hazard and sea level rise scenarios. 6. Compare results across states and communities to provide a regional perspective, contrasting housing market responses that are shared across the region versus those that are unique to specific communities. 7. Implement stakeholder/policymaker workshops and engage with partners to evaluate implications for adaptation. Progress During the First Project Year ( ) Progress during the first project year was slowed by a delay in the receipt of project funds from Sea Grant. Although the formal project start-date was February 1, 2014, a fully-executed contract was not received from Woods Hole Sea Grant until April 23, This three month delay in funding reduced the number of tasks which could be completed during the initial project year. Despite this delay, significant progress was made on project objectives during the initial project year. Work during year one focused on the completion of objectives 1, 2, 3 and 7. Objectives 1 and 7. Initial project tasks to complete objective 1 included engaging with project partners across New England to plan project tasks and to obtain necessary data. As noted in the metrics section of this progress report, project partners include: 1. Great Bay National Estuarine Research Reserve 2. Waquoit Bay National Estuarine Research Reserve 3. Wells National Estuarine Research Reserve 4. New Hampshire Sea Grant 5. Rockingham (NH) Planning Commission 6. University of New Hampshire Cooperative Extension 7. The Nature Conservancy, Connecticut Chapter 8. Southern New Hampshire Planning Commission 9. Coastal Adaptation Workgroup (NH) 10. Sea Level Adaptation Working Group (ME) Multiple in-person and remote project meetings have been held with these project partners to discuss project tasks, data needs and objectives. The project team has also discussed ways that project tasks and outputs can be integrated with ongoing coastal adaptation working group activities across New England. For example, the project team has discussed ways to coordinate with project partners to develop heretofore unavailable data layers (e.g., a hardened shoreline data layer for New Hampshire) that would benefit both the project and project partners. These integrated efforts are ongoing. Workshops are also being conducted and planned to coordinate the efforts and findings of 2
6 multiple projects seeking to inform coastal adaptation in New England. Based on coordination with project partners and an initial assessment of data availability, an initial set of case study communities was selected in Connecticut, New Hampshire and Maine. Initial work has focused on the development of data and models for the New Hampshire case study communities. These approaches will then be adapted for case study communities in other New England states. In New Hampshire, the initial set of communities being considered for modeling includes Dover, Hampton, Hampton Falls, Seabrook and Exeter, although recent model advances may enable models to be run for all communities subject to coastal flooding in Rockland and Strafford counties. Objective 2. Property value, tax base and other property sales data required for model estimation have been drawn from a professionally compiled database comprising thousands of records on residential home sales over the past 20 years. These data include all recorded residential property transactions in coastal counties of CT, MA, ME, NH and RI between 1988 and Property sales data are currently being linked to a GIS database that will ultimately include: (1) parcel boundaries for target communities, (2) flood risk and coastal hazard data, (3) digital elevation models, (4) land use and land cover data, (5) parcel, neighborhood and community characteristics, and (6) indicators of coastal amenities such as distance to the shoreline and coastal view. Geocoding of property transactions data is complete, and current tasks are focusing on completion of other database components. Each geocoded property has been attributed with the geographic subdivisions (i.e. county, census tract, school district, etc.) within which it resides and a flood hazard zone (if available). All project databases have been uploaded to a secure shared storage space established for the project, to facilitate coordination among the project team. Objective 3. Simultaneous work has focused on development and estimation of econometric property-matching models that will enable robust estimation of property value and tax base responses to coastal hazards, public/private adaptations, and other mitigating factors in case study communities. The general econometric framework is anchored in methods originally developed to identify causal treatment effects, usually in the context of government programs such as education interventions. The goal is to quantify the effect of the treatment under investigation (e.g., presence of a home in a hazard area; existence of a particular adaptation measure) on outcomes of interest (e.g., property value) after controlling for observable characteristics (e.g., coastal views, characteristics of the home, etc.) of the treated and untreated (control) homes. As of the end of project year one, nearly all initial models and codes have been developed to enable subsequent estimation of the proposed property-value matching models, once the full GIS database has been created. These models demonstrate how matching models can be used to ameliorate specification problems typically encountered in hedonic property value models, and hence lead to improved estimates of property value effects. Models have been estimated using both simulated data and initial (incomplete) versions of actual project data for New Hampshire communities. Models estimated using simulated data show almost ideal properties of the resulting estimator, which casts a promising light on subsequent empirical estimation once all necessary data components have been compiled. Current work is addressing the comparability of market areas 1 Data was not available for every coastal county, especially in Maine, and we also have sales data for non-coastal areas as well, which have also been geocoded. 3
7 within the models to be estimated (i.e., what communities or areas are similar enough to be included in a single matching model, without undue risk of bias in resulting estimates of property value and tax base effects). The proposed projections from the resulting models will enable evaluations of economic resilience under alternative community adaptations, revealed through comparison of future property value and tax base scenarios. 4
PART I - PROJECT IDENTIFICATION INFORMATION PART II - DOCUMENTATION
No students reported this period Progress Report Project Update Report Reporting Period: 2/1/2014-1/31/2015 MIT Sea Grant College Program E38-300 292 Main Street, Cambridge, MA 02139 (617) 253-9305 PART
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