The Supreme Folly of Buying Oceanfront Property

If one wants to have an opinion on climate change, you need to at the very least have read the Summary for Policy Makers from the Fourth Assessment Report (AR4, 2007) of the Intergovernmental Panel on Climate Change (IPCC). Is this too much to ask? It is only 18 pages long!

Within the text, you find this chart on temperature and sea level rise (click for larger image):

IPCC Sea Level jpg

The range of seal level rise estimates across the scenarios goes from 18 cm to 59 cm. Nothing to be alarmed about? Let’s read the column text within the chart:

Model-based range excluding future rapid dynamical changes in ice flow

That basically means any ice sheet melt factors that are difficult to measure. In other words, we estimate sea level rise risk but without including the risky bits. The years flow by, and the science moves on. Here are the sea level rise scenarios from  the United States National Climate Assessment dated December 2012 (click for larger image):

Sea Level Scenarios jpg

The range is now 20cm to 200cm including all the risky bits. An oceanfront property that is economically feasible to defend with, say, 20cm of sea level rise may not be defendable at one metre plus. And note that the market is not stupid enough to wait until inundation before marking down the price. Once the market predicts the deluge decades ahead with a reasonable degree of certainty, prices are correspondingly marked down.

That absolutely prime piece of oceanfront property suddenly moves from a freehold to a leasehold valuation metric. Caveat emptor.

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