Can Removing Development Subsidies Promote Adaptation? Evidence from the Coastal Barrier Resources Act

As natural disasters grow in frequency and intensity under climate change, limiting populations and properties in harm's way will be one important facet of adaptation. This study focuses on one approach to discouraging development in risky areas --- eliminating public incentives for development, such as infrastructure investments, disaster assistance, and subsidized federal flood insurance. We examine the Coastal Barrier Resources Act of 1982, which eliminated federal incentives in designated areas along the Atlantic and Gulf coasts known as the Coastal Barrier Resources System (CBRS). We estimate the causal effect of CBRS designations by identifying plausible counterfactual areas using novel machine learning and matching techniques. Our results show that CBRS designations lower development density by 85% inside the designated areas but increase development in neighboring areas by 20%. We also show that the resulting conservation of natural lands generates environmental services in surrounding communities, increasing property values and reducing flood damages. These findings inform ongoing debates regarding cost- effective public policies to prevent over-development in risky areas.

Speaker: Hannah Druckenmiller, Resources for the Future