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POL 663: Ocean Policy and Law
Lecture 5: Management of Coastal Resources Development, Wetlands, Sea Level Rise, Takings Introduction
In the preceding materials we discussed the Coastal Zone Management Act (CZMA) and discovered, from a policy standpoint, the CZMA strives to create a uniform system of guidelines for the rational management of coastal resources across the United States. With the framework of the CZMA under our conceptual ‘belts,’ we now move on to a more detailed consideration of the management of coastal resources within the CZMA. Specifically, we will be looking at some of the characteristics of coastal resources (including the dynamic nature of coastlines and the more recent phenomenon of sea level rise), how those characteristics are valued, and the role of legal frameworks (in particular takings challenges of government regulation) within this more detailed review of coastal resources. To help place this review into context, we can identify a few important characteristics about coastal areas: • First, we must understand coastal areas are dynamic places by design. We know that coastlines are impacted by a number of natural forces. Gravity exerts its influences on the tides creating a constant ebb and flow of water along the coast. Storms move along the temperature gradients created between sea and land making coastlines susceptible to strong winds, heavy rains, and other forces of nature. Many coastal areas are made up of sand and other erodible substrate that provides for a constantly changing and dynamic environment. Also, coastal areas are generally at low elevation allowing for the storms mentioned above to intermittently flood these areas. With the increased observance of sea level rise, the lowest lying coastal areas are increasingly susceptible to these forces meaning many coastal areas create concerns for government in terms of human health and safety. Second, we can acknowledge that many coastal areas represent places of high demand, making the property rights of coastal areas a key consideration in the policy of managing coastal resources. The most highly valued real estate markets exist in coastal areas, and this value is closely tied to other important policies like property taxes and thus government revenues. The demand for living along the
Page 2 of 14 coast and the high property values that exist there are important considerations when thinking about the management choices for these coastal resources. • Government coastal management choices are constrained by both policy choices and legal frameworks. Policy constraints include the desire of government to capture the benefits of demand and high property value that attach to coastal areas; government policy options that harm either demand or property value tend to be discounted because of the effects they can have on other government priorities (tax base, social welfare spending, etc.). Legal framework constraints derive from the U.S. Constitution, particularly the Fifth Amendment prohibition against the taking of private property without a public purpose and paying just compensation. Thus, where government wants to regulate coastal areas, the regulation of those areas must be viewed in light of regulatory takings challenges where the regulation deprives the private landowner of all viable economic use of their property.
In this section we will pay close attention to the characteristics of coastal areas identified above. Through a deeper understanding of these characteristics we can develop insights into the variables that influence coastal management policy. In particular, our focus on legal frameworks will help inform the limits on how certain resources within the coastal zone are managed, and this will in-turn help us better comprehend the association between legal landscapes and policy directions.
Revisiting Property Rights and Coastal Resources
Recall the following figure distinguishing property rights based on the two characteristics of divisibility and excludability:
Page 3 of 14 The figure was used to help explain the different kinds of property rights encountered at the coastline; it was used in the context of understanding private and public rights at the shore. In that earlier discussion we noted that the public rights to the coastline were sometimes in conflict with private rights in the same area. Here we are looking at private rights mainly through the lens of development and property rights along the shoreline; those who have private rights in the shoreline are often most interested in the ability to develop those rights, for example the right to build on their coastline property.1 The desire to develop along the coastline is driven primarily by demand for coastal living, and that demand in-turn creates incentives for local governments under the premise that increasing population is desirable (including the associated benefits of increased tax revenues, etc.).2 However, the dynamic nature of the coastline also presents hazards for coastal communities. Recently the frequency, duration, and intensity of storms have increased the risk of living along coastal areas. This risk traditionally has been mitigated through a mix of private and public insurance to, effectively, subsidize living along the coast.3 With both private and public insurance of coastal areas waning in
One of the main reasons for advancing this right to develop is the valuation that goes along with such a right. As mentioned earlier, coastal property is generally in high demand, and much of that demand stems from the desire to live along the coastline. Thus, the ability to develop coastal land (or redevelop as the case might be) is a critical right that many private landowners (and coastal developers) cherish. Any government action that limits this right to develop is often seen as a direct conflict to this preference for development.
The lure of increased tax revenues from development in coastal areas is particularly enticing to coastal communities where the property is often used intermittently by the owner as a second home or during certain times of the year (summer for example). The owners of these “summer coastal homes” often pay a premium in property taxes because of the valuation of the home. However, they often do not use many of the public services from which those property taxes are derived. For example, they are not full year residents of the area meaning their potential use of public resources (police, fire and rescue) is diminished by the time they are not physically proximate to the area. In addition they often do not have their children (if they have children) attending the public school system. Thus the funding from their property taxes for these purposes can be redistributed to support others in the community.
These subsidies do not include the additional subsidies provided by government over past years for the development of infrastructure along coastal areas (roads, sewer systems, utilities) that encouraged the settlement and development of coastal regions. Today many of these subsidies have been halted meaning undeveloped coastal areas must develop this infrastructure through other means. Reasons for removing this government subsidy include the threats to coastal communities from the increasing frequency, duration, and intensity of coastal storms as well as the continually developing scientific consensus on sea level rise.
Page 4 of 14 recent years, the ability to shift these risks of loss has also waned; today more of these risks are being internalized by coastal municipalities through the expenditure of local resources to mitigate the risk and loss of coastal development. Thus, incentives for government to internalize the new risks associated with climate change (particularly sea level rise and increasing coastal storms) have motivated a change in policy from development to the protection of undeveloped coastal areas.4 When government moves to protect coastal areas, that protection usually involves a change in how private property rights are managed. For example, government may decide that undeveloped tracts of coastal property should not be developed, and thus passes a regulation that prohibits development of certain coastal land; prior to this regulation coastal land could be developed. Putting on our legal frameworks hats the question, then, is whether or not the change in government policy is one that is lawful?5 We may agree that changes in circumstances (a more disruptive coastal zone) may justify a new policy direction (more restrictive development of coastal areas), so there may be agreement on the goal of the new policy direction. However, we must look to the means being employed to achieve this goal and determine if the particular means runs afoul of our legal frameworks.6
The rationale for the protection of coastal areas is multifaceted. Government certainly wishes to protect those who live near the coastline from the impacts of sea level rise. In addition, government wishes to protect those who live inland but might have a greater chance of being impacted by coastal development (coastal development can change the normal landscape allowing coastal storm inundation to reach further inland). Finally, government is beginning to realize the importance of maintaining coastal attributes that can be impacted by sea level rise. Thus, preventing development along the coastline can provide a buffer zone that will allow for coastal landscape attributes to migrate inland over time as sea level rises: allowing that development can prevent coastal attributes from moving landward.
Consider, for example, that the private landowner will likely loose a lot of value in the coastal land when the property, via government regulation, becomes undevelopable. It may be the private landowner paid a premium for the coastal land under the valid premise that the land could be developed: the state of the law at the time the land was purchased. However, the change in the law preventing development now impacts the value of the land and, without government intervention, the financial loss is solely borne by the private landowner. We can extend this example to a developed piece of coastal property that is now, post regulation, prohibited from redevelopment; for example, the property cannot be ‘improved’ in any way that increases the value or functional use for the private coastal landowner. In both cases the private landowner is incurring the costs of the new regulation.
It is important to note that government has other choices beyond banning development of coastal areas through regulation. For example, government can choose to purchase coastal land outright through its power of eminent domain (an expensive option depending on the extent of the purchase program). Or, government can choose to place
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Let us assume the default measure of protection to coastal areas will involve government passing a regulation that limits development of coastal land. We can then consider variants of this kind of policy response and see the difference our legal frameworks analysis has on these policy approaches.
Applying Legal Frameworks to Coastal Regulation
To begin, we recall our hierarchy of laws copied here for reference purposes:
Regulations created by government sit at the bottom of our hierarchy of laws. Thus, any such regulation, even if carrying out a statutory (law) intention, will be found invalid if that law/regulation is in direct conflict with a constitutional principle. In situations where private coastal landowners are challenging a government regulation that impacts their private property rights, we are dealing with an issue between the Tenth and Fifth Amendments to the U.S. Constitution. The Fifth Amendment of the U.S. Constitution includes within its language a prohibition against government actions that result in the ‘taking’ of private property without a public purpose and the payment of just compensation. Thus, if the government conduct is considered a taking, even if that conduct does not emanate from a government intention to take the land, then the government can only engage in the action if there is a public purpose supporting the action and government pays the private landowner just conditions on coastal land, for example creating a special set of rules that apply to the conditions of development in coastal areas, like having to either abandon or move the dwelling if and when sea levels approach, something often referred to as a rolling easement. These options are discussed in greater detail in the McGuire reading in this section.
Page 6 of 14 compensation for the ‘taking.’ So a government regulation that is intended to prevent coastal development in order to protect humans and coastal resources may indeed be considered a ‘taking’ (in this case a ‘regulatory taking’) if the government action meets the legal requirements for a taking. The question that we must answer is what acts support the legal requirements of a taking? In the readings you are given summaries of case law to help provide a context for answering the question above: what acts support the legal requirements of a taking?7 The key in answering this question is to determine the link between the regulation and constitutional principles that might support the government action; if the regulation is not linked to a constitutional principle then it likely fails when compared to the Fifth Amendment constitutional protection. To begin we can recall the spectrum between takings and police powers copied here:
Recall that the spectrum above gives us a few pieces of important information when considering the role of legal frameworks in establishing the impact of government actions on private property rights. Government actions, including the development of regulations, that are clearly within the traditional Tenth Amendment roles of government (providing for the health, safety, and welfare of citizenry – the police powers) are ‘anchored’ in a constitutional right. Thus, if the government action is clearly within its police powers, then the action is supported by a constitutional power. This is an important first inquiry because it established the relative hierarchy between the government action and the impact it has on private property rights. Remember, we know that private property rights are protected by the Fifth Amendment to the U.S.
The McGuire/Hill reading provides an excellent background of takings jurisprudence to help establish a contextual understanding of the historical development of regulatory takings law.
Page 7 of 14 Constitution, thus there are constitutional rights at-stake when government regulation affects private property rights. We do not know the characterization of the government conduct; if the conduct is well within the Tenth Amendment police powers, then the legal analysis is one of comparing constitutional rights. Alternatively, if the government conduct is outside of constitutional powers, then the regulation stands subservient to the constitutional right protecting private land from government action under our hierarchy of laws. If we were to take the takings cases mentioned in the readings and overlay them onto our spectrum of constitutional rights above, we would likely see something like the following:
Collectively these cases help us understand the relationship between three important factors in the context of legal frameworks: (1) the characterization of the government action; (2) the impact of the government act on the private landowner; and (3) the purpose of the government action (what policy goal is being advanced?). What follows is a summary of the three cases mentioned above in context to help draw out the major principles of takings analysis to coastal resources: • Loretto is a clear example of what the courts have termed a categorical taking. The New York ordinance (a city law) allowed for private cable companies to attach boxes to the physical structure of privately owned buildings. The decision indicates that any government action resulting in a permanent physical occupation of private property – no matter the purpose – is a categorical taking requiring both a public purpose to justify the action, and when that public purpose is shown, requiring just compensation be paid to the private landowner for the
Page 8 of 14 continuing occupation.8 Because permanent physical occupations are always found to be takings, Loretto sits clearly in the red extreme of our spectrum in the figure above; the government reason for the occupation, even if it is a very good reason well within Tenth Amendment justification, will still be found a taking. • Tahoe Sierra is an example of a government regulation with a purpose clearly within the police powers of the state and carefully written to be impermanent, i.e., for a limited duration of time. Due to the reduced water quality of Lake Tahoe brought on in large part by increased development along the lake, government officials enacted an ordinance (city law) that placed a moratorium on development for a period of time. The purpose of the ordinance was to protect water quality, and the duration of the ordinance was limited. Under this situation the judicial branch found no violation of the Fifth Amendment, indicating the ordinance was reasonably tailored to advance a police power (Tenth Amendment power), and placed limited duress on private property rights because there was a future expectation of development (development was stalled under the ordinance but not prohibited forever). Thus, Tahoe represents a clear example of a government action that alters private landowner expectations (barring development), but does so for a clear Tenth Amendment purpose, and also limits the impact on the private landowner. Government acts of this kind are clearly within the green section of our spectrum. Lucas presents the third kind of regulatory takings scenario that, like Loretto, presents a different kind of categorical taking. In this case South Carolina enacted a moratorium on development of coastal barrier islands in the aftermath of a hurricane to protect against future damage, a clear police power rationale for the regulation. The moratorium resulted in a prohibition on development for an indefinite period of time (unlike Tahoe Sierra).9 The judicial branch ruled that in cases like this, a government act that deprives a private landowner of all viable economic use of their property is a categorical taking. As noted in the figure above, Lucas does not fit cleanly within or outside a regulatory takings finding. Rather, the question of whether a takings has occurred is dependent on a close inquiry of the facts; since those facts are not objectively clear in many instances, Lucas is placed in the yellow box area (slightly in the red), suggesting whether a taking has occurred will be highly dependent on the facts of the case. And the inquiry is whether, under the facts, the government act results in deprivation of all
If the government regulation fails to show a public purpose, then the result should be to find the action unsupported under the eminent domain power of government. Under such a finding the physical occupation should cease (the regulation allowing for the boxes to be placed on the buildings revoked).
This is not to suggest an accurate timeline between these cases (for example, Lucas occurring after Tahoe Sierra), but rather to highlight the factual/legal (facts that are legally important) distinctions between the cases.
Page 9 of 14 viable economic use of the property; where this standard is shown a regulatory taking has occurred.
Placing Takings Jurisprudence Into A Policy Context
So we can step back from our in-depth review of case law impacting coastal land use regulations and think about the policy context in which all of this material exists. To do this I want to bring forward those 3 characteristics of takings law mentioned above: (1) the characterization of the government action; (2) the impact of the government act on the private landowner; and (3) the purpose of the government action (what policy goal is being advanced?). If we look closely at how the courts are viewing takings challenges, we can come to some understanding of the impact these legal frameworks are having on policy options that include controlling coastal land use. In deciphering takings law, the purpose and characterization of the government’s conduct are key considerations. The essence of this characterization is looking at the legal basis upon which government is claiming its right to regulate. Where government is claiming a right based on a fundamental police power (the purpose), then it is more likely the government action will be on par with takings protections (two constitutional provisions will be pitted against one another). Alternatively, if the government conduct cannot be characterized within its constitutionally protected police powers, then the act will more likely lead to a constitutional violation. From a policy standpoint this matters because it highlights the importance of justifying coastal resource protections in fundamental police power parlance. Of course, if those protections are far removed from imminent threats (say protecting against future sea level rise by prohibiting development today), then there is a greater chance, on balance, that the regulation will be deemed unjustified in the face of the immediate impact on private property rights. So this really comes down to a policy lesson about proximity of harm in relation to the interests at-stake. Although not explicitly stated in any U.S. Supreme Court opinion on takings as a fundamental rationale, the question of timing becomes an important consideration when thinking about policy directions. All things being equal, it seems that policy alternatives seeking to restrict coastal land use will more likely pass constitutional scrutiny when the harm being protected against is imminent; for example, the harm to water quality to Lake Tahoe was ongoing and thus the argument that further development would immediately harm water quality seemed reasonable. The impact of the government act on the landowner is also an important variable from a policy standpoint. Lucas helps us understand impact in context; when the economic impact of the government act is so severe as to remove all viable economic use of the property, then a taking is likely found. Thus, policy instruments should take heed of this economic impact and ensure that government conduct stays below this threshold when regulating private land use for the protection/benefit of coastal resources.
The Rolling Easement Application
Page 10 of 14 Let us put these principles towards an application. Earlier a rolling easement as a kind of land use overlay was mentioned as a land use planning technique that protected coastal features against future sea level rise. The premise is quite simple: current land use patterns are allowed to occur, but those patterns cannot include the holding back of the tide (say through ‘hard armoring’ techniques such as building seawalls, revetments, and other hard structures). If tides move landward over time (for example, through sea level rise), then one must either abandon their property (when the tide approaches), or move their property landward to avoid the encroaching sea. As a policy instrument, the rolling easement protects a number of coastal resource interests, both today and tomorrow. The coastal landscape is protected, including all of the important ecological assets of that landscape, by ensuring coastal features can migrate landward and will not be hindered by armoring structures. Present coastal development is also protected to the extent that those who are willing to develop and live in coastal areas today do so understanding the limits of their development. The public is also protected as the easement places the costs of coastal storms and sea level rise on private landowners rather than having that burden fall on the public. In sum, there are a number of advantages to the rolling easement from a public policy perspective. From a legal frameworks perspective the rolling easement also shows promise. First, the easement does not prohibit development of coastal property; coastal landowners can develop their land but with restrictions. The restrictions on development focus on transferring future risks to the landowner, for example by preventing hard armoring of the area around the private land. By limiting (but not prohibiting) development, the restriction does not deprive the coastal landowner of all viable economic use of their property. In addition, the restrictions are forward looking; so long as sea level rise does not occur, the condition of allowing the sea to migrate unabated inland also does not occur. Only when the sea is actually rising does the condition of allowing the migration into the private property get triggered. Thus, there is a complementary nexus between the purpose of the regulation (protect the public and coastal features) and the proximity of the harm (the coastal landowner only has to deal with the impact of the regulation when the harm is occurring). The overlay of legal frameworks on policy options like the rolling easement example here provides some opportunity for analyzing different aspects of the law as they relate to coastal planning. The merits of the rolling easement (described above) in relation to legal limitations on land use regulation help us see the importance of the law when it comes to policy; the law can inhibit policy directions, but it also can help identify policy pathways, like the rolling easement, that achieve policy goals. It is important to note that the example above has been simplified, as has been the discussion of takings law, in order to provide you with a general context for understanding the concepts; we don’t cover all of the nuances in takings law nor coastal land use planning that can be discussed, we simply cannot without devoting an entire semester to the topic. However, you have been given substantial leads for more in-depth analysis in the readings and associated references within the readings. Those wishing to delve into this subject in greater detail are encouraged to do so. For purposes of this course, it is enough that you understand the
Page 11 of 14 interaction between significant legal structures (particularly the Fifth Amendment Takings Prohibition) and coastal resource planning.
Implications of Lucas and the Valuation of Coastal Resources
From a coastal management perspective the Lucas case is incredibly important, mainly because it forces us to think about a fundamental question: how are we going to value our resources, and in valuing them, who is going to take on the responsibility of managing those same resources – the government, individuals, or a mix of the two? In answering this question, I have placed below a summary of valuations I have used in other courses (specifically environmental policy and principles of sustainability); we really need to think about total valuation to answer this question, and total valuation can be summarized as follows: So much of what we do as a society is based on how we value things, or maybe which values we hold most dearly. In the United States, we generally represent our values (at least privately) through market-based transactions. These transactions may, or may not, include all of the values inherent in a resource. Consider the following example posed as a question: what is the value of a wetland? To answer this question, classical economics would likely ask what is the willingness to pay for this wetland on the open market? In a private market, one might be willing to pay an amount based on the development potential of the wetland (the same kind of analysis one would do for a private piece of land that could be developed). Does this direct analysis capture all of the values inherent in the wetland? It likely depends on whom you ask, and may also be dependent on other factors (both scientific and social) that may attach to that particular piece of land. The following questions may highlight some of the issues surrounding valuation of the wetland example from above: • • • Where is the wetland located? (If it is near Manhattan, then it may have significant development value.) Can the wetland be filled to accommodate development? (If the wetland cannot be filled, then maybe it has less value, especially for development purposes.) What kinds of creatures inhabit or otherwise use this wetland? (If there are endangered species using this wetland, then maybe there are reasons to protect it – other values to consider.)
The point here is there are a number of factors that can easily change our analysis of the value of the wetlands, even when we are only considering its direct value. However, there are other categories of values in wetlands. They may be summarized by the following equation: Total Value (TV) = Direct Values (DV) + Indirect Values (IV) + Non-Use Values (NuV)
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Direct Values Direct values are meant (generally) to represent those values expressed above in a private market-based transaction. We can easily identify these values through our willingness to pay for the value in question. To reiterate, for our wetland, the direct value is most likely the value of the wetland for development.10 Since direct values are usually determined through a market transaction, they are generally the easiest uses to objectively value. For instance, if you wanted to know the direct value use of soybeans as food (or recently fuel), you can check its current commodity market price. Others have described this value, as related to resources, as the provisioning services of the resource since we are determining the relative value of the resource in terms of its capacity to provide humans with some other use: wood from trees (original use) transmuted into building material or furniture (some other use). Indirect Values Indirect values are those values that are not directly traded or expressed on an open market (at least in most instances), but are critical in other respects. In the wetland example, we might argue the wetland provides numerous indirect values outside of being developed for land. Indeed, scientific research has indicated wetlands are important regulators of water quality; they absorb many of the chemical compounds and organic matter that can lead to pollution and eutrophication (nutrient enrichment) of water bodies. Wetlands also serve as important habitat (in many areas) for numerous aquatic species, including commercial fish species. Now, depending on where those wetlands are located, the indirect value can be substantial. For instance, New Your City obtains its water from a reservoir that is surrounded by natural wetlands. Those wetlands maintain the quality of the water, saving the NYC substantial sums in water treatment costs. These indirect values, sometimes called regulating services, are important components of the overall value of a particular system. Non-Use Values Non-use values are those values we ascribe to a resource, but are not necessarily represented in a market transaction, or easily identified as regulating services (they do not necessarily provide us with a fungible natural service like maintaining water quality). Rather, non-use values are those values we come to appreciate from a resource strictly from an aesthetic or cultural standpoint. Continuing with the wetland example, we might enjoy the ambiance created by a wetland; they represent nature, and create a unique scenic quality with the arrangement of water birds (ducks, geese, loons, etc.), as well as the unique plants of wetland resources. While we might not regularly engage in
However, it is important to note certain market participants, such as the Nature Conservancy, have used direct market transactions as a means of protecting land as open space, showing a preference for land in its natural state.
Page 13 of 14 market transactions for these kinds of values, they are entirely real, and many times we can express our general willingness to pay to protect these kinds of values (have you ever donated to a nature organization to aid in the survival of the polar bear, dolphin, or similar animal?). Sometimes non-use values are discussed as cultural services, providing us with a sense of place and relevance, without necessarily enriching our wallets. In economics then, we can begin to seek a language by which we identify and account for the various values of a system; some values are transparent and easy for us to identify (like direct values of the system); others are less transparent, but still offer importance in how we perceive the world (such as non-use values). The key, I believe, in having an honest discussion about sustainability is to identify all relevant values of a resource. Without doing so, we are failing to articulate the relative costs and benefits of a particular action, which means our actions may be based on less than complete information. Benefit-Cost Analysis As a final point of economic consideration, let us take a moment to discuss benefit/cost analysis, or BCA. Imagine we must choose between maintaining the wetland area around the Catskill, NY reservoir or filling and developing the wetland to provide housing (which we can assume is in high demand). Which is the better choice? Obviously, we must engage in some discussion of the costs versus the benefits of the proposed actions. How will we identify these costs and benefits? Consider our equation above about identifying values: Total Value (TV) = Direct Values (DV) + Indirect Values (IV) + Non-Use Values (NuV) If we fail to consider all of the values associated with the project, then our cost/benefit analysis will be flawed (it will not give us an accurate reading of costs and benefits because not all values are being used in the analysis). So, we see BCA may be an important framework by which we can analyze a decision, but it has limitations. One major limitation is it can only analyze the relative costs and benefits as identified by the person making the analysis; if the methodology in the analysis does not include a total valuation approach, then we may come to a decision about a resource that is incomplete. Consider the concept of total valuation in relation to coastal resources. The dynamic nature of the coastline makes it subject to a variety of values in each category of out total valuation technique. How might we think about coastal resources from this total value accounting methodology, and how does such a methodology impact our larger analysis of coastal policy decision-making? These are difficult questions to answer, and require a great deal of forecasting into the future when making decisions about the present use of coastal resources.11 While we do not have complete answers for these larger questions,
Consider sea level rise and land use planning as one example. If we engage in policy decisions today that internalize the threat of sea level rise, then we are making decisions
Page 14 of 14 particularly questions requiring the ability to ‘see’ into the future, we can identify the capacity of policy instruments to be developed in such a ways as to balance the interests of today and tomorrow (like the example of the rolling easement) without running afoul of legal frameworks. Make sure you carry these concepts forward as we continue our exploration of ocean law and policy. END OF SECTION.
about resource allocation that may or may not come true; even the rolling easement redistributes current resources by forcing coastal property owners to fully internalize the future risk of property abandonment (for example by preventing armoring of the coastal property against rising seas). This impacts valuations of that coastal property today, and some might argue that such forecasting is harmful in this context.