Are seawalls correlated with lower property values in California?

This paper investigates the impacts of seawalls – designed primarily to protect buildings from erosion – on property values in two coastal Californian counties, San Diego and Santa Cruz, with emphasis on the costs to neighbouring properties that are not directly protected. This is a previously unmeasured social cost. There is pressure to protect the coast as sea levels rise with climate change but while individual properties may benefit from seawalls, beachgoers and neighbouring properties may experience negative effects due, for example, to accelerated beach loss.

At the present level of seawall armouring, the authors find no strong evidence to suggest that seawalls are positively correlated with the values of protected properties. However, they find that doubling the level of seawalled properties would have a negative impact, not only on the values of unprotected properties, but also on the values of those directly protected by seawalls. The authors estimate that this action could lead to a reduction in property values of more than US$718 million in total (and $7 million in tax revenue) in San Diego and more than $5.4 billion (and $7 million in tax revenue) in Santa Cruz.

The difference between the two counties is attributed to geographical characteristics, as coastal properties in San Diego are located in areas with higher altitude than those in Santa Cruz.

The results raise serious questions as to whether seawalls in California pass a simple cost-benefit analysis.

Key points for decision-makers

• Seawalls can accelerate beach loss in several ways, including by magnifying the power of retreating waves, which carry more sediment out to sea and create a steeper undersea slope, precluding replenishment of already eroded beaches. They often cause the loss of nearby beaches because the new steeper undersea slope prevents sand moving down the coast.
• Better beach views, wider beaches and closer proximity to the beach are all correlated with higher property values, while flood risk significantly lowers property value.
• Studies to date strongly suggest that people who value beaches do not like beaches with seawalls but there is not an overwhelming amount of evidence that seawalls are correlated with lower property values.
• For San Diego county, results suggest that doubling the current number of properties protected by seawalls would be associated with more than $718 million total reduction in the value of all affected houses, both those protected and not protected by seawalls (on average $20,954 and $22,365 per home respectively). In terms of property tax revenues, this could cost the government $7 million in lost revenue.
• For Santa Cruz county, there is a significantly greater impact, reaching to about a US$77,000 per-home decline in values for protected properties and a $78,000 decline for non-seawalled properties, to a total of more than $5.4 billion, causing government revenue loss of about $54 million. This implies there is no positive net benefit of increasing the current extent of seawalls.
• This work focuses on San Diego and Santa Cruz counties to extend previous research using the same dataset which centred on the east coast of the US. This analysis could inform policy discussions in California regarding responses to coastal hazards including sea level rise.
• Looking at these two counties also offers variation arising from differences in certain geographical attributes. For example, houses in San Diego are situated in higher places and closer to the water than in Santa Cruz. The counties are comparable because they have a similar extent of seawalled properties.