From devastating wildfires in LA to snowstorms in Texas, climate change threatens all our homes and livelihoods.
Here in New York, our most significant risk is flooding. A recent Regional Plan Association report found that over the next 15 years sea level rise and severe storms could destroy almost 20,000 homes in New York City, the same number LA lost to wildfires.
It’s a true crisis in a city that already has a severe housing shortage.
New York City’s critical infrastructure is also at risk. Flood-related disruptions like subway shutdowns and power outages would paralyze the entire city and by extension the tri-state region. Superstorm Sandy cost the City $19 billion in damages, 30% of which were indirect economic losses. Climate change and the accompanying risk of natural disaster have grown dramatically in the last 13 years and the next Sandy will be far worse.
Natural disasters are now so destructive that they inflict tremendous economic damage even before they occur. Other coastal states like Florida and California have seen insurance premiums skyrocket and major carriers exit entirely.
In all, protecting our city is a moral imperative and an economic necessity. The magnitude of the risk demands protection of like scope and scale. New York City needs a citywide coastal defense system, which would directly protect approximately 1.7 million New York City residents and over a billion square feet of real estate.
The projected total cost to build this full project is $50 billion. The alternative is that repeated flooding events could cost an unprotected City over $220 billion more in damages by 2100. So protecting the City is a excellent investment, if an expensive one.
Near the end of 2024, Deputy Mayor for Operations Meera Joshi asked us to form and chair a Resilience Finance Task Force, made up of some of the City’s finance, real estate, and civic leaders. We spent six months looking for ways to create a realistic, sustainable financial framework to protect our city.
Taking as given the need to begin work now, the Task Force carefully considered many ways to pay for this critical infrastructure. We focused on equity, simplicity, feasibility, and transparency.
First, we must secure as much funding as possible through New York State’s Environmental Bond Act, which sets aside more than $2.5 billion for flood risk reduction and climate change mitigation. But the City currently has no set source of funding to pay for the full cost of extreme weather protection, and we can’t rely on federal funding to come to the rescue. There’s no question we must fund ambitious infrastructure projects to defend ourselves. The question is how.
The Task Force recommended the following:
Create Shoreline Protection Districts to cover ongoing operations and maintenance: Modeled after Business Improvement Districts, these districts would allow the city to protect the operations and maintenance of resilience projects, ensuring the infrastructure remains functional over the long term. Without dedicated revenue, essential maintenance of coastal defenses could be underfunded, increasing the risk of catastrophic damage.
Use multiple, diverse revenue streams to cover capital costs: We can’t rely on just one source of revenue for our capital costs. Diversified revenue streams could back bonds that spread the cost over decades and minimize the burden on any one group.
Create a new resilience entity to independently manage and protect the funding: Like the successful model used to finance New York City’s water and sewer system, a new authority would manage the money without competing with other necessary services like parks and education.
Demonstrate and quantify the benefits of flood mitigation to ensure this work makes insurance more affordable: With this information, the City can collaborate with the insurance industry to incentivize insurers to remain in the market and reduce costs for New Yorkers.
Inaction has a cost – as we have seen in other parts of the country, these costs are measured both in dollars and lives.
These recommendations show how seriously we will have to take this issue and are worthy of further in-depth analysis as the City determines the best step forward. We can’t afford to wait to protect ourselves from extreme weather, and if we don’t start building it now, we’ll leave ourselves, and future generations, exposed.
Jamie Rubin is the chief investment officer of Aligned Climate Capital and NYCHA chair. Arlene Shaw a managing director at Brightwood Capital LLP and a board member of New York City Water Board.
