Economic Assessment
FLOODING REDUCES THE ECONOMIC AND SOCIAL WELLBEING of residents and businesses
About the Economic Assessment
The Resilient Broward planning effort identified the attributes that people care about that would be impacted by increased flooding from sea level rise. These attributes were carefully selected with the help of business leaders and community organizations, with positive results. Improvements to these attributes, or benefits, from the adaptations, relative to doing nothing, were quantified in dollars and mapped to each census tract or industry type.
Evaluation results inform strategic and developmental planning, help prioritize adaptation measures, and provide input critical to preparation of financing proposals.
Phased Adaptation
The Resilience Plan includes a range of adaptation strategies to address the impacts of climate change and rising sea levels. The adaptive planning approach identified two tiers for adaptation:
Tier 1 (By 2050)
Focuses on preparing for a two-foot rise in sea levels by 2050. This phase includes constructing seawalls up to 5.0 feet NAVD to mitigate storm flooding, enhancing drainage systems to manage heavy rainfall, adding pumping stations, upsizing culvert crossings, modifying control structures, and implementing green infrastructure such as swales and expanded green spaces to absorb water and reduce urban heat.
Tier 2 (By 2070)
Addresses the challenges of a projected 3.3-foot rise in sea levels by 2070. This phase begins with the Tier 1 investments and adds the raising of seawalls to 7.0 feet NAVD for enhanced coastal protection and adds advanced drainage systems, including pumping and collection systems to manage increased stormwater volumes behind seawalls. Tier 2 also expands green spaces further to mitigate urban heat and enhance biodiversity.
Estimated Benefit of Adaptations
As implemented this plan will provide billions of dollars in economic savings and benefits for Broward County in the form of annual avoided property damage and preserve economic activity, community wellbeing, resident wealth, and government services that otherwise would be lost to flooding.
Capital Cost of Tier 1 and Tier 2 Adaptations, in Billion Dollars
Annual Operation, Maintenance, Renewal and Replacement Cost, in Million Dollars
This Adaptation Plan Protects the Future of Broward County With Positive Economic Returns and Improved Wellbeing
The Tier 1 and Tier 2 adaptations were both found to be economically feasible. The dollar values of these benefits are expected to be from 1.40 to 3.90 times higher than the costs of mitigation investments, presenting a strong community and business case for organized implementation.
Average
Annual Dollars
Change
from Baseline
$0.78
Billion
31%
reduction
$3.60
Billion
83%
reduction
Avoided Property Damage
Countywide Implementation
2.0-foot SLR
TIER 1
5.0-foot NAVD Seawalls
3.3-foot SLR
TIER 2
7.0-foot NAVD Seawalls
Implementing resilience adaptations in Broward County is critical for ensuring a sustainable and thriving future. These adaptations address the County’s unique vulnerabilities to climate change and environmental stressors, leading to numerous long-term benefits.
Enhanced flood protection will protect homes, businesses, and critical infrastructure from water damage. Under the Tier 1 investments with 2.0 feet of SLR, the average annual avoided property damage, as measured by the avoided cost of repair and replacement, is expected to be $0.78 billion. Under the Tier 2 investments with 3.3 feet of SLR, the average annual avoided property damage is expected to be $3.6 billion.
Flood protection lowers household and business costs, improves the quality of life, and keeps flood insurance premiums in check.
Average
Annual Dollars
Change
from Baseline
$0.11
Billion
24%
reduction
$0.66
Billion
69%
reduction
Increased Short-Term Economic Activity
Countywide Implementation
2.0-foot SLR
TIER 1
5.0-foot NAVD Seawalls
3.3-foot SLR
TIER 2
7.0-foot NAVD Seawalls
Gross Value Added (GVA) measures the contribution of businesses within the County to the County’s overall economic activity and includes the income produced from all sources.
The economic benefits modeled here were based on the increased GVA from:
-
Lower direct flooding impacts to businesses
-
Reduced disruption to roads.
Economic stability and growth will be supported by safeguarding key economic sectors and attracting new businesses. Flood protection preserves jobs, creates wealth, and improves markets and customers satisfaction. A competitive economics environment is fostered as more investment resources become available.
Dollars
Change
from Baseline
$12
Billion
92%
increase
$20
Billion
182%
increase
Greater Flood Insurance Coverage
Countywide Implementation
2.0-foot SLR
TIER 1
5.0-foot NAVD Seawalls
3.3-foot SLR
TIER 2
7.0-foot NAVD Seawalls
The cost of flood insurance rises with flood risk, damages, and claims. Comprehensive flood mitigation investments are essential to minimize these effects. The flood mitigation strategies included in this plan are expected to benefit our residents by helping to keep flood insurance premiums in check, an action that is key to housing affordability and protects against the shock of uninsured losses.
Relative to no action, Tier 1 and Tier 2 investments would increase the number of residential housing units with NFIP flood insurance policies, resulting in greater insurance coverage countywide.
Under the Tier 1 investments, approximately $12 billion more insurance coverage will be purchased by property owners. Under Tier 2 investments, insurance coverage will increase by an estimated $20 billion relative to no action, when flood risk and impacts would otherwise negatively impact flood insurance price and thus availability.
Dollars
Change
from Baseline
$8
Billion
recovers
32%
lost RE value
$31
Billion
recovers
78%
lost RE value
Increased Real
Estate Values
Countywide Implementation
2.0-foot SLR
TIER 1
5.0-foot NAVD Seawalls
3.3-foot SLR
TIER 2
7.0-foot NAVD Seawalls
The real estate analysis assessed the benefits of adaptation on the market value of homes countywide.
Under the Tier 1 investments, the value of real estate in Broward County is expected to be $8 billion higher than if no investment is made to mitigate flood damage. Under Tier 2 investments, the value of real estate is expected to be $31 billion higher. The adaptations preserve homeowner wealth.
Average
Annual Dollars
Change
from Baseline
$0.21
Billion
5%
increase
$0.96
Billion
22%
increase
Increased Tax Revenue
Countywide Implementation
2.0-foot SLR
TIER 1
5.0-foot NAVD Seawalls
3.3-foot SLR
TIER 2
7.0-foot NAVD Seawalls
Without adaptation, revenue from two categories of taxes collected in Broward County is expected to fall due to increased flooding over time. Lower tax revenue limits the quantity and quality of government services we rely on for our daily lives.
The first tax category is called a “production-related tax” and includes sales and excise taxes, customs duties, business property taxes, motor vehicle licenses, severance taxes, other taxes, and special assessments that would be impacted by a reduction in GVA due to sea level rise.
The second tax category is the “ad valorem property tax” which is based on the market value of real estate. Given existing millage rates assessed by the County, municipalities and government agencies, ad valorem tax revenue would be expected to fall as flooding increases with SLR.
Total Capital Costs by Investment Type
Tier 2 adaptation costs are in addition to the costs of Tier 1 investment, as Tier 2 relies on the adaptations implemented as part of Tier 1.
Economic Feasibility Analysis
Economic feasibility was evaluated for two sea level rise scenarios:
Scenario 1
-
By 2050 the sea level will increase by 2 feet compared to 2020 conditions
-
By 2070 the sea level will increase by 3.3 feet compared to 2020 conditions.
Tier 1 investments would be made from 2025 through 2040, and the additional investments under Tier 2 would be made from 2040 to 2070.
Scenario 2
-
By 2050 the sea level will increase by 2 feet compared to 2020 conditions
-
Assumes sea level will remain at 2050 conditions through the rest of the 101-year evaluation period.
In Scenario 2, only the Tier 1 investments are made beginning in 2026 and completed in 2040.
Economic feasibility criteria:
For this Resilience Plan, and in general, a project is deemed economically feasible if the present value of net benefits is greater than zero. When this happens, the project’s rate of return on investment will be greater than the 5% annual discount rate used and the project’s benefit-cost ratio will be greater than 1.0.
The evaluation included estimating:
-
Present value of net benefits
(benefits minus costs)* -
Rate of return on the investment (ROI)
-
Benefit-cost ratio
*The present value of net benefits takes the stream of annual benefits and costs and discounts them to present value using a selected annual discount rate.
Economic feasibility means:
Value of Net Benefits
> 0
and
ROI > 5%
and
Benefit-Cost Ratio > 1.0
Results of Benefit-Cost Analysis of Tier 1 and Tier 2 Investments
Conclusion: both Tier 1 and Tier 2 adaptation investments are economically feasible, as indicated by their net present values, rates of return on investment, and benefit-cost ratios