Lack of Climate Action, puts Texas Economy at Risk

Is the Houston region doing enough to convince key stakeholders that it is taking Hurricane Harvey and more generally climate risk, seriously? In some recent meetings I Car_off_cliff_signhave attended, the answer seems to be trending to no. There is significant growing concern that the Houston region is not going to take the necessary steps to mitigate against future climate risk whether that is flooding, extreme heat and drought. Although Harris County appears to be taking some action, there has not been a lot of action taken by other jurisdictions. In some cases, it appears to be business as usual.

Houston industry has a lot to lose if it appears appropriate actions are not taken to mitigate climate risk. Highly talented individuals needed for a diverse and robust economy have choices. Will those already here choose to stay, particularly those that are tied other industries other than oil and gas? Further, will our existing companies be able to attract new talent if it is business as usual in regards to mitigating climate risk?

Not only should we be thinking about the viability of our existing businesses and economy, but we must also consider how lack of inaction impacts future investment. The question of whether Houston is doing enough is not only coming from businesses that are already located here, it is also coming from businesses and investors that consider investing in the region. Much of corporate America believes in climate change and see that real risks exist. Decisions are being made as to whether to invest in certain geographies and industries based on environmental and climate risk.

Moody’s Says Texas at Risk

The consequences of a lack of inaction became much more real in November. Inaction to mitigate climate risk for states and communities that are seen as vulnerable is getting the attention of credit rating agencies. For the last couple of years Moody’s, one of the three primary bond rating agencies, has been working on how to include climate risk vulnerability in its bond ratings for state and local governments.  In November it made an announcement that it will start taking account of climate risk in its credit ratings.

To date, climate risk had not been a factor in bond ratings. This is a little disconcerting when you are talking credit-worthiness of large, long-lived infrastructure projects whose performance is highly likely to be influenced by near-term climate shocks. With climate shocks, such as floods, droughts, extreme heat, fires, etc., communities are displaced and businesses are disrupted. If people locate elsewhere and businesses cannot operate, tax revenue goes down. At the same time, while revenue decreases need for investment to rebuild increases. Less revenue will be available to pay for existing debt service, as well as to cover new debt service for rebuild efforts. Ability to pay back existing debt decreases and creditworthiness is in the toilet. This makes it much more difficult to borrow at an affordable rate.

What Moody’s has done is a shot across the bow to four states, Texas being one of the them. It has not provided a timeframe as to when exactly climate risks will be used directly to measure credit risk. However, it is clear that climate risk is being tracked. It is likely to play a role in the very near term.

When looking at climate risk, Moody’s will focus on multiple factors including, share of economic activity in coastal areas, hurricane and extreme weather damage over the last several years, and percent of properties located in a floodplain.  These factors only cover a portion of a community’s risk, primarily short-term, high-intensity storm events. It does not take into account the risks to a community from extreme heat, long-term drought, disease vectors, etc. All of these factors impact a community’s economic productivity and infrastructure performance. They should be quantified in a manner to be included to some degree. However, it is a good step forward.

Work Being Done Along Gulf Coast

There are a growing number of initiatives in the Houston region that are pushing for change to address climate risk. My employer, HARC, is currently developing the Community Adaptation and Resilience Alliance (CARA). CARA is being developed to work toward real, region-wide efforts to mitigate climate risk, from flooding to extreme heat to drought. CARA is looking to coordinate strategy and planning efforts across the region, bring resources and build capacity.  Through this effort, we have identified a large number of efforts that are responding to Hurricane Harvey. It is key to keep this momentum moving ahead. Also, we must move the focus beyond Harvey and flooding and include a more comprehensive, holistic approach that can identify and work toward solutions to the multitude of climate threats we are currently experiencing and will encounter in the near-term. Maybe it will happen. The Sustainability Director for the City of Houston, Lara Cottingham, was on Houston Public Media, talking about a Climate Action Plan this week in reference to the Moody’s report. This is a first. Maybe we have turned a corner.

Advertisements

Mitigating Climate Risk in Harris County, TX – The Problem with Being a First Mover

Harvey appears to have gotten the attention of some of our local policymakers. Harris County appears to be the first to realize that Harvey is likely not to be a once-in-a-lifetime event and significant steps should be taken to mitigate climate risk.

1200px-Fulshear_TX_Wildflowers
Fulshear, TX

There has been some question as to how our elected officials would respond to Harvey in regards to long-term rebuilding efforts and reducing the likelihood of future flooding. There had been a call by some developers, even before Hurricane Harvey was over, to keep moving down the same road with business as usual. Also, the region’s previous responses to other recent flooding events did not provide a lot of hope that much would happen in regards to land-use and development regulations.

However, on December 5th, Harris County Commissioners approved new regulations for floodplain development. The new regulations include requirements for pier and beam foundations and for homes to be built at a higher elevation in some flood-prone areas. Also, it requires that new construction is built at a 500-year standard rather than the current 100-year storm standard.  There is also a high-wind standard in place for new construction.

There are some question as to what the impact these new regulations will have. New construction in Harris County is likely to be a bit more expensive as builders build up. This could be higher development costs to build up the land in the area with fill dirt and/or to build homes to a higher elevation. All of this is cost will be passed on to the homeowners. There will be some tolerance by homeowners for this premium to have greater peace of mind, but only so much tolerance. What is also likely to happen is that some developers will choose not to build in Harris County and move on to other nearby counties. Residents will decide how far out builders can go.  Commuting time and congestion will limit the movement away.

Did Harris County Jump the Gun?

It is great to see Harris County take a leadership position and pass regulations to mitigate against flooding and wind events. However, did they get too far out ahead of the other counties and local jurisdictions? Harris County is just one part of a large region.  Will being a first mover in land-use regulations be an advantage for the County? If the surrounding counties do not take similar action, does Harris County regulatory activity push development out?  Professor Festa at the South Texas College of Law suggests that these regulations would be a disincentive to build in Harris County and would lead to urban sprawl. Should Waller, Fort Bend and Montgomery County expect a development boom?

This may be the case. Those that are typically not supportive of development regulations did not appear to push back too much. Some builders say housing costs will go up a bit to meet elevation standards and the costs will be passed on to customers. The assumption here is that customers are willing to take on some additional costs for peace of mind. However, could another reason for minimal pushback be that developers feel they can move on to these other counties with minimal risk to their business? There is a significant amount of development already happening in these surrounding counties and residents are quickly following. Fulshear is a great example. With the new expansion of  Farm-to-Market Road 1093, the infrastructure is there to move a lot of people to Fort Bend County.

Beyond the direct economic implications of losing development to surrounding counties, a second issue is that working in isolation does not solve the upstream flooding problems. If more development is pushed north and west. There will be more impermeable surfaces surrounding Harris County which may result in greater flooding risk to the county and further downstream. All of these bayous and rivers are interconnected; water flows in this region from the northwest to the southeast. Shrinking the permeable surface around Harris County is not good for Harris County. That is why there is such a push for the third reservoir and to conserve much of the remaining Katy Prairie.

I applaud Harris County for taking these steps. They have realized more quickly than the rest of the region that Harvey type flooding is not a one-off event and action must be taken.  However, they cannot be successful and our region cannot thrive if the regulatory activity takes place in isolation. Mitigating storm risk, whether it is flooding, extreme heat, hurricanes, etc, must be done at the regional scale. The interdependencies of our economic and natural systems are too great not to act together.

 

 

Rebuild and Forget? New Climate Models Say Not So Fast

In March of this year, I wrote a blog post on the adaptation gap.  Here I discuss that due to some

Climate – Galveston, Texas, September 17, 2008 – Piles of debris are lined up along the seawall on Galveston Island where Hurricane Ike made landfall.

uncertainty as to actual intensity and frequency of future climate-induced extreme weather events, it is very difficult for cities to plan and invest in resilient infrastructure. The outcome of this uncertainty is that cities are not taking the appropriate action to mitigate risk. Business-as-usual continues, the same infrastructure is designed and built and communities remain vulnerable.

To remedy this climate adaptation gap requires better information on the likelihood and intensity of extreme weather events. If this information is unknown, we cannot quantify the risk. When you are not able to quantify the risk, you cannot properly run cost/benefit analysis that would result in more resilient infrastructure. The metric is not there.

New Climate Analysis Points to More Storms

Fortunately, a major step forward was taken this week. Kerry Emanuel from the MIT Lorenz Center published a paper that is likely to shake up the climate adaptation planning industry. The paper “Assessing the present and future probability of Hurricane Harvey’s rainfall” provides greater clarity regarding the likelihood of future major hurricane rainfall events in Texas. The model provides a more concise look at future hurricane risks by assigning probabilities to the likelihood of these events out to the year 2100. They accomplish this by combining global climate models with their own hurricane simulation model. By doing so they are able to develop higher resolution models that can give “precise simulations of hurricanes.” (Read the paper if you want to get more specific.)

From this paper, we see that the likelihood of 20 inches plus rainfall from hurricanes has increased six-fold since 2000.  The likelihood of greater number and intensity will continue to increase out to the year 2100 if we do not work to significantly reduce greenhouse gas emissions.  To state it in another way, the study finds that during the years 1981 to 2000, there was about a 1 in 100 chance of a hurricane producing a large rain event exceeding 20 inches. By the year 2081, the study’s models suggest that the likelihood will increase to a 1 in 5.5 chance.

The benefit to planners and government decision makers is they now have a little better clarity as to what to anticipate in the next few decades. This clarity, i.e. probability distributions and likelihood estimates of future hurricane events, increases their ability to quantify the risk of future hurricane events. What it does not do is help to understand the risks of other natural disasters, such as non-hurricane related floods, droughts and extreme heat in the Texas Gulf Coast region. The problem with this is that we cannot weigh the likelihood and impact of separate extreme climate and weather-related events. How does a community prioritize action if it does not know what is the greatest risk?

Investing in Houston 

Let’s set that concern aside for now because with this study we at least have a better idea as to hurricane risk. So how does this become a part of the decision maker and planners’ conversation and analysis? Is Mayor Turner, Judge Emmett, Harris County Flood Control and/or the Army Corp of Engineers going to use this information to guide future stormwater management infrastructure planning? At this time, they are actively working toward identifying appropriate stormwater mitigation investments. In the policy-making world, we would call this a  punctuated equilibrium agenda-setting event. Now that this is on the public’s agenda, how far will they go and will this momentum continue? Time will tell. With the lack of funding coming from the federal government at this time and the considerable pushback on the $61 billion Texas Harvey Recovery Plan, building more resilient appears not to be a federal priority.

If the federal funding does not materialize, believe it or not, it will be very likely that much of this momentum goes away. People will rebuild, some infrastructure will be patched up and things will continue as usual. If history is any indicator, our short-term memories will allow us to forget and continue on.

It is up to the business and NGO community to keep this a part of our conversation and on the agenda. To keep it on the agenda will require resources, as well as ongoing demand from the private sector, particularly the oil and gas companies. It is in their best interest to do so. Their business and employees can only undergo so many disruptions before employees and their families look for higher ground.

If the private sector decides it is not worth the effort to change the way we do things, we will go back to business as usual. We will rebuild and try to forget this ever happened. However, with what Emanuel’s models are showing, we may not have the luxury of rebuilding and forgetting.

 

 

 

Critical Action Needed to Make Electric Power Grid more Resilient to Climate Change

With three major hurricanes wreaking havoc on the United States’ power sector in 2017

2560px-Katia,_Irma,_Jose_2017-09-08_1745Z–1935Z
Katia, Irma and Jose…After Harvey and before Irma…                 Hurricane Season 2017

there has been a growing discussion on how to make the grid more resilient. Due to climate change, it is anticipated that storms are likely to become more intense and possibly more frequent, placing growing pressure on the ability of the power system to keep the lights on. We are already finding that climate-induced extreme weather events are already resulting in more frequent and longer duration outage events in the United States.

Defining Resilience 

With this growing threat, a resilient power system sounds like a good thing. Unfortunately, it appears that there is some difficulty in defining what we mean by a resilient power system. From many of my recent conversations, I find there is confusion by what we mean by resilience. For example, I see in some cases, reliability and resilience are used interchangeably. To be clear, reliability is not resilience. According to a recent National Academies of Science Report “Enhancing the Resilience of the Nation’s Electricity Grid,” reliability deals with ensuring there is an adequate amount of power supplied to meet demand, even in times of expected and “reasonably” unexpected outages. Resilience differs in that the expectation is that a resilient system can adapt and lessen the likelihood that an outage will occur and if one does occur to manage the event, lessen impacts, recover as quickly as possible and learn how to deal with future outages.

Valuing Resilience 

IceStormPowerLinesBeyond defining resilience another issue we face is that much of the decision making and cost/benefit calculations are based on economic efficiency calculations that value the benefits of a reliable grid, not a resilient grid.  The focus is on short-term cost-benefit optimization that is detrimental to resilience improvements. In other words, the calculation looks at what keeps the lights on now in our current environment, not what investment would limit the large-area, long-duration outages that may occur due to severe weather activity or other cyber or physical attacks. To overcome this issue requires that there is a better understanding of how to value resilience. To do this requires that we have a better idea as to the probability and intensity of future events that may impact the grid. These known unknowns and unknown unknowns are not easy to value which is problematic when putting together a rate case to fund this investment. Fortunately, steps are being taken to quantify metrics tied to what would be considered a resilient power system. With the development of better metrics to measure performance, it will be more likely we can make more resilient appropriate investments.

Resilient Components – Weighing the Costs

As we get better at improving our ability to define, measure and value a more resilient power system, what would be some strategies that we could pursue? There are a variety of ways to make the transmission and distribution system more robust. All of them may add significant upfront costs to the system but are likely to also provide long-term benefits as the power system is more able to withstand more severe weather events. Following is a very high-level overview of some options that could be considered.

Put the wires underground, sometimes…Undergrounding power lines is an option that I hear a lot. The problem with “undergrounding” is that it is significantly more expensive than hanging the wires on poles. So, we must weigh the cost and benefit of such an approach. In an area that is susceptible to high winds, ice storms and tornadoes, placing the wires underground may be worth the cost. The question we must ask is whether we anticipate there will be an increasing number of these events that would justify burying these cables? At this time, we know that things are going to get a bit hairier, but we are uncertain as to how hairy and when. That makes it difficult to pull the trigger.

Also, we must remember that an approach that would make a power system more resilient in one location may not be as successful in other. For example, if an area is susceptible to flooding, burying wires may be a bit more problematic. Although protections can be put in place to protect against flooding of underground lines, that adds additional cost and it may still not prevent a disruption. Further, any disruption, due to damage to an underground cable, will likely take longer to fix and be more costly than repairing above-ground wires. We must ask are we preparing for floods, high winds or both?

Elevate substations…Not only are the wires susceptible to water, substations can be, as Underwater_substation,_Cedar_Rapids,_June_12_2008well. This was demonstrated by Hurricane Harvey flooding which ruined multiple substations. This damage can be limited by elevating the platform for where these components sit. Levees and dikes can also be built to protect these systems. This is easier done for new infrastructure development, however moving or elevating legacy systems can be cost prohibitive if the proper valuation of this benefit is not properly accounted for.

Strengthen wires and poles...Additionally, for the transmission system, there are methods that can make it more robust, particularly to ice storms and strong wind events. This would include reinforcing poles and towers or constructing wind-resistant concrete and/or steel poles. There could also be more frequent deadends placed along the system. At present, the practice is to place a dead end every ten miles. Placing these deadends more closely together will reduce the likelihood of a domino effect if one of the standard designed poles are compromised.

A smarter gridFor distribution systems, improving resilience requires moving from a radial design to a more networked design. A networked design has more than one supply feed that limits outages if one of the lines go down. The network designs should be coupled with more advanced communication infrastructure that allows systems damage to be isolated and to reroute power when a component is damaged. These smarter grid systems have been deployed in a patchwork across the United States. CenterPoint, in the Houston-Galveston region, does have some smart grid components deployed which allowed for more rapid recovery during Hurricane Harvey.

Final Thoughts

The bottom line is that solutions exist. I presented a short list of options that may be considered. I didn’t even touch on the fast-approaching opportunities that come with decreasing cost of battery storage. The problem with pursuing many of these strategies is the added expense. Our decision-making frameworks for utility investment are not set-up for resilience investment, they are set up to ensure a reliable grid. Fortunately, with better climate modeling and resilience metrics, we are getting closer to properly valuing the short and long-term benefits of the resilient investment and are moving in the right direction. In the meantime, we will just keep trimming the trees.

 

 

 

More Green for Green Infrastructure – Funding to Mitigate Climate Risk

green infrastructure
Street Side Bioswale – mitigate climate risk; storm water damage

In the United States, it is estimated that $4.6 trillion will need to be spent to meet our current infrastructure needs. As of the 2017 ASCE Infrastructure Report Card funding may be available for about half of that amount; there is a funding gap of $2.1 trillion.  In the 2016 report Failure to Act: Closing the Infrastructure Investment Gap for America’s Economic Future,  the ASCE does a nice job in explaining what may happen in case we do not take this funding gap seriously. According to the latest report card, taking it seriously means investing about $206 billion per year. However, it is important to keep in mind that the $206 billion per year does not take into account future damage to our infrastructure due to climate risk.

Recently, I posted a blog about the possibility of closing the funding gap using resilience bonds. As I mention in the blog, resilience bonds are an interesting idea that is waiting for the right circumstances. There is growing interest in these bonds, as a way to pay for more resilient infrastructure to reduce climate risk, but the right projects have not been identified.

Environmental Impact Bonds

To deal with climate risk what seems to have a bit more traction are environmental impact bonds (EIB).  One has been issued in Washington DC for stormwater mitigation and a second is being considered in New Orleans.

The EIB is a tax-exempt municipal bond that utilizes a pay for success approach to financing infrastructure. The bond provides upfront capital for innovative resilience-focused projects and shifts downside risk from government agencies to the private sector investors. The public sector repays investors based on the whether the agreed-upon environmental outcomes are achieved. If agreed upon performance is not achieved, the investor covers the loss.

Washington, DC – Storm Water Mitigation

The first EIB was closed in September 2016 with the DC Water and Sewer Authority. This is a 30-year, $25 million bond with a mandatory tender after five years. The interest rate is set at 3.43%. With this bond, DC Water is looking to implement green infrastructure to mitigate stormwater risk but lacked capital. Further, the utility was attempting to implement a new, more innovative approach to stormwater mitigation and was concerned about performance risk. The EIB investors took on this risk and will pay DC Water if the infrastructure under-performs. The investors in this project are Goldman Sachs and Calvert Foundation.

At the five year mark, an additional payment of $3.3 million will be made, either by DC Water or the investors. Who pays will be dependent on actual stormwater runoff reductions. Who gets paid is determined by an independent evaluator. The evaluator set the performance metrics for the project. If reductions in stormwater runoff are greater than 41.3% then DC Water will bay an outcome payment. If the runoff is reduced less than 18.6%, Goldman and Calvert will pay a one-time risk share payment to DC Water.

New Orleans – Wetland Restoration 

New Orleans just started down its own EIB path July of 2017. The focus here is on the

NASA-completes-study-of-Louisiana-Gulf-Coast-Levees-and-Wetlands
Louisiana Coastal Wetlands

restoration of coastal wetlands. The coastal wetlands act as a natural buffer from sea level rise and storm surge. The wetlands have been damaged by natural events, but this damage has been exacerbated by oil and gas exploration activity. It is anticipated that without restoration of these wetlands, approximately 1,750 square miles of wetland could be lost by 2060. This would result in significant economic and community costs.

The desire here is to restore this natural infrastructure.  EDF will be working with Louisiana’s Coastal Protection and Restoration Authority to identify the specific coastal restoration project. A portion of this restoration work is expected to be funded by RESTORE dollars. However, additional funding is needed to complete the work to mitigate this climate risk. The additional funding will be provided by NatureVest in the form of an EIB pay-for-success bond.

The United States faces significant costs to bring existing infrastructure up to standards, as well as prepare for and recover from natural disasters. Non-traditional financing mechanisms are available to help fund this infrastructure. Earlier, I discussed resilience bonds as a possibility. Reliance on traditional bond funding, and federal and state dollars are not sufficient to manage the existing gap, much less prepare for future climate risks.  It is good to see that some cities are taking innovative steps forward to build and prepare for the future.

 

Post-Hurricane Harvey, Can We Build Back Better?

According to FEMA damage estimates over 105,000 structures in the Houston-Galveston region experienced damage due to Hurricane Harvey natural disaster. The City of Houston government buildings alone realized approximately $175 million in damage.  This is $100 million over their insurance limit.  Both the private and public sector are actively working recovery efforts with a desire to rebuild as quickly as possible. Most have made their FEMA claims and those that have flood insurance, only about 15% of the population, have met with adjusters and are actively pursuing their claims.

Check out the HARC Story Map on Hurricane Harvey Impacts to learn more.

As I talk with people both in the private and public sector, the underlying concern is how harvey story mapwe are going to rebuild from this natural disaster. Based on my own conversations, many know they are not going to be made whole whether they have FEMA and/or insurance. Further, these conversations reveal that many do not want to build back to what was, they want to build to be more resilient. Unfortunately, the funding to do so appears not to be available. Many would like to stay in their neighborhood and build-up, however, $100,000 which are estimates they are hearing to raise their elevation, are not in the cards.  Some may get buyouts, but that is a fraction of the structures that were affected and remain in harm’s way.

The city government and school districts are not in a much better position.  They are largely looking to restore the existing building and get services back to normal. I have not seen anything about rebuilding more resilient public buildings, but maybe we are too soon in the process. Like those in the private sector, it is unlikely they will get any funding in the near-term, state or federal, that will allow this to happen.

Beyond the individual property recovery, there is also consideration for larger infrastructure recovery and resilience improvements to mitigage natural disasters. Items include the third reservoir in the northwest of the region, the Ike Dike, speed up the completion of the of Brays Bayou mitigation project, to name a few.  Similar to individual properties, they also do not appear to have the adequate funds available.  (Except for maybe Brays Bayou completion.)

I have written in previous posts about the funding options that are available for improving the resilience of communities.  They can be found here and here.  In both of these articles, I discuss a variety of funding mechanisms that can be used to improve community resilience including green bonds, resilience bonds, and public-private partnerships.

Solution: Resilience Bonds 

I would like to focus a bit more on resilience bonds.  Resilience bonds are bonds that allow issuers to build infrastructure to reduce loss or likelihood of loss during a natural disaster event; build new infrastructure with the expectation of reducing risk. These can be used for coastal protection, sea walls, stormwater mitigating green infrastructure, etc.

For a resilience bond, the issuer would utilize a catastrophe model to determine baseline risk to infrastructure from natural disasters. The issuer would then calculate how the implementation of a more resilient system would reduce future loss in comparison to this baseline. A resilience rebate is set based on the value of the anticipated reduced loss. The reduced risk of principal to the investor and the reduced premium expense to the sponsor is captured and provided to the sponsor as a rebate. This rebate can be used for financing resilient infrastructure or risk reduction investment.

pier and beamI am not an insurance expert, but the way I understand it is that building more resilient reduces the risk of a project to a natural disaster. This decrease in risk reduces the premium of the catastrophe bond (cat bonds) which is already being issued to cover infrastructure in the event of a major triggering event.  The rebate is coming from a lower cost of cat bonds. For example, cat bonds that cover flood damage or storm surge damage, when up for renewal, can be paired with a set of resilience-focused projects. These projects will lower risk to this infrastructure, thereby reducing premiums resulting in funds available to invest in more resilient infrastructure.

By taking steps to improve resilience utilizing resilience bonds, the public sector reduces risk to infrastructure, as well as realize economic, financial benefit from the proceeds of the resilience rebate. Resilient infrastructure funding by resilience bonds can reduce economic, social and environmental risk, as well as receive financial benefit of avoided losses. Cat bond costs also continue to go down in cost as more resilient infrastructure is added to the community. Further, more resilient infrastructure would also reduce costs of individual hazard insurance, wind, flood, etc. Not only does government see lower insurance costs, so would households and private companies.

What About Individual Property Owners? 

What has been discussed here is largely focused on public sector facilities and infrastructure development. We still are lacking the mechanism for private properties, commercial and residential. This is becoming an even more urgent issue as we see the National Flood Insurance Program is under significant financial duress and is actively working on moving properties off of this insurance into the private market. One thing to consider as this $1 billion transition occurs, is for Texas to create to flood insurance program similar to the Texas Windstorm Insurance Association (TWIA).

In May of this year, the TWIA sponsored a $400 million cat bond and currently has $4.9 billion in aggregate funding.  This amount is anticipated to cover the current hurricane season. What can make the TWIA more sustainable, would be to consider resilience bonds as it renews its cat bonds. This would include using cat models to assess wind risk to private properties. It could then assess what strategies can be done to reduce this risk to private properties. A good guide to follow would be the Fortified Standard. If properly structured, the TWIA would see a resilience bond rebate. These rebate dollars would then be set in a fund that can be provided to homeowners to reduce their wind risk to hurricanes and straight-line wind events. The outcome would be more resilient infrastructure, less costs for damage recovery and overall improved community resilience.

Keesler Air Force Base: One year after KatrinaResilience Bonds to Mitigate Flooding for Private Sector

Can a similar process be considered for the flood insurance market? There appears to be a healthy appetite for cat bonds by institutional investors. What would it take for the state to issue flood-related cat bonds? Can the state accurately assess flood risk for the private sector? There is ongoing concern about the accuracy of our flood models and floodplain maps, particularly along the Gulf Coast. If we can agree on the risks, can we identify the appropriate risk mitigation strategies for individual structures? I would not think that is an impossible task. We would then need to quantify the avoided loss with the implementation of these strategies. This would create the rebate. This resilience rebate could then be available for individual property owners to implement the mitigation measures. The result would be lower individual premiums, lower recovery costs and an overall improvement in community resilience from natural disasters.

 

 

 

 

 

“All the Above” Climate Adaptation

For long-term resilience to climate change, flooding is not the only issue we must deal with at this time. In light of the current situation, it is easy to place all of our efforts on reducing flooding risk. We have a tendency to focus on the most recent event and ignore extreme heatother threats to our well-being. It is human nature to do so. However, taking a narrow view on one particular issue could be detrimental to the Gulf Coast’s long-term well-being.

Granted with Hurricane Harvey, the Ike Dike and Coastal Spine have garnered a significant amount of attention. This is interesting due to the fact that Hurricane Harvey’s flooding would in no way be mitigated by this infrastructure. In any case, it is good to see flooding not being the only issue discussed.

As important as it is to work on our flooding and storm surge issues, three floods in three years and storm surge with Hurricane Ike, we must also keep in mind that Texas is one long-drought punctuated by torrential rainfall. It was only five years ago that the entire state experienced a significant drought that resulted in considerable damage to our road infrastructure, water distribution systems, power generation, livestock and agriculture and our St. Augustine (The last is a joke. We really should get rid of this stuff, it is a huge waste of water.) In any case, droughts are a real issue that we cannot ignore.

Drought

I have mentioned the drought experience and future risk for our power grid in previous posts. The first one looking at our current predicament and the second considering what our future grid faces.  I have not covered the variety of other drought-related issues that we have recently faced and may face in the near term. During the 2011-2012 drought our drought texashorizontal infrastructure, pipes and street, faced considerable issues, particularly our water system in Houston. At one point, during the drought over 700 pipes per day were breaking. It is estimated that 15%, 22.4 billion gallons of water, was leaked and never made it to the end-user.

The drought also caused an estimated $7.6 billion loss to the farm-sector.  The hardest hit being the livestock industry and hay production. Closer to the Gulf Coast, we see that the drought greatly damaged the rice industry and placed its future in question. As we move along the Gulf Coast, we see that the drought also had a significant impact on the Gulf ecosystem with elevated salinity levels. This damages oyster beds and fisheries that are dependent on freshwater inflows from the Colorado and Brazos River.

Extreme Heat

[amazon_link asins=’B06ZYNGMJ3,B004VMF57Q,B01LXQTVNE’ template=’ProductCarousel’ store=’750astrodomes-20′ marketplace=’US’ link_id=’8e8c601d-b1e9-11e7-9805-f5ee833c8a96′]

Also, as many are aware, it gets hot in Houston, and it is expected to get considerably hotter. Between 1981 and 2010, the Houston region averaged 31 days over 95 degrees. If climate models are correct, it is anticipated that the number of days will triple to close to 90 days per year at or above 95 degrees. These temperatures are already having an impact on the region. For example, the City of Houston has put in place an extreme heat emergency plan and had to put it in action the Summer of 2016. This heat not only melts and warp infrastructure, it is a significant public health issue for those who work outside, as well as those vulnerable populations that do not have access to appropriate air conditioning.

The heat is anticipated to have a significant economic impact on the Gulf Coast. A recent Science article looked at the economic consequences of climate change in the United States. The study finds that there is likely to be a significant transfer shift of wealth from southern states up to northern and western states. It looks like there will be a point when it will get too hot in the kitchen and people will get out…

Public Health – Vector-Borne Diseases 

The factors mentioned above will have public health implications, whether it is contaminated flood water or extreme heat and humidity. Other public health issues we anticipate with a warming climate, is the increasing number of vector-borne diseases (VBD). This is largely the spread of disease to humans through ticks, mosquitoes, and flies. West nileWe have been dealing with West Nile virus for a few years and recently have started to see Zika get a foothold in the region, the most recent south of Houston in Hidalgo County. Ticks have been a nuisance for years, particularly the ones carrying, Lyme disease. 

It is anticipated that we should expect a greater number of disease transmission with increasing rainfall and humidity, rising temperatures and human migration. Rainfall, humidity, and temperatures provide ideal breeding grounds (except it can get too hot for mosquitoes) and migration allows for the introduction of creatures that otherwise may have a more difficult time making it to the Gulf Coast. Limiting these impacts will require that we set up robust sentinel and surveillance programs to identify the arrival and movement of these diseases around the Gulf Coast. This should be coupled with prevention methods that reduce standing water, as well as public health education programs.

All the Above Resilience 

As we move forward with improving our economic resilience, we must keep in mind two things. First, community resilience and adaptation is a regional issue. Taking action as an individual community or county and not coordinating with others in our region may likely be a waste of money and time. Second, we need to approach resilience holistically and not solely focus on one issue. It is easy to focus on just flooding at this time, but we should not forget that just a few years ago the entire region was dealing with a historic drought, is now regularly facing extreme heat days and seeing an increasing number of VBDs entering the region. So, as we move forward, we need to work together and take an all the above approach.