Coordinating policies that spur job creation and improve community resilience can help mitigate the impacts of climate change on local infrastructure, jobs, and economies in the Chesapeake Bay region.
For the numerous communities that are under threat from weather-related disasters and the effects of climate change, building resilience will require coordinating efforts across different policy areas. One challenge, which we highlight in our recent working paper, is reconciling economic development programs with resilience policies that help communities prepare for and adapt to climate change.
The United States currently spends $60 billion per year to spur job creation in communities. State governments, which account for the bulk of the spending, offer incentives in the form of tax credits, direct subsidies, public-private partnerships, and other activities that are designed to promote business development and job growth. At the federal level, the US Economic Development Administration runs a wide range of programs that are designed to encourage innovation, global competitiveness, and regional collaboration around economic growth. In many cases, federal and state programs target communities and regions where the economies are struggling through so-called enterprise zones or opportunity zones, which are designated areas where private investment is incentivized through favorable tax rates, regulatory exemptions, and other tools.
The federal government also establishes programs to combat increasing impacts from climate change and natural disasters. For instance, the Infrastructure Investment and Jobs Act of 2021 provides $47 billion over a five-year period for investments in climate resilience. The Federal Emergency Management Agency manages several programs that provide grant funding for resilience and hazard mitigation, such as a new resilience revolving loan program that the Infrastructure Investment and Jobs Act has seeded with $500 million. Looking ahead, the budget that the Biden administration has proposed for 2024 includes $24 billion in spending on community resilience efforts across agencies. States also are increasing their spending on resilience.
But without coordination, economic development programs and resilience programs run the risk of working at cross-purposes: economic development programs inadvertently can encourage growth in areas that are exposed to the most climate impacts, and this growth can hamper policies that are intended to improve climate resilience in those areas.
Jobs at Risk Due to Flooding and Sea Level Rise
Our paper estimates the number of jobs that are at risk from sea level rise in the Chesapeake Bay region. According to the latest projections from the National Oceanic and Atmospheric Administration, the Chesapeake Bay region is especially vulnerable to sea level rise: flooding already regularly affects coastal communities, and faster-than-average sea level rise is expected to cause even more frequent and intense flooding in this region in the near future. While many studies focus on the amount of land area and number of people that are affected by sea level rise, our focus on jobs is unique and adds to a growing body of literature that investigates the economic viability of communities that are at risk from the effects of climate change.
We find that 176,500 jobs in the Chesapeake Bay region are located in areas that are exposed to a 100-year flood under current climate conditions (i.e., in areas that have a 1 percent chance of flooding in any given year). Sea level rise will cause the number of jobs in these exposed areas to rise to about 263,500 by 2050. These numbers represent 3.3 and 5 percent of all jobs in coastal counties and cities in the region now and in 2050, respectively.
However, these region-wide job statistics mask serious problems in several coastal communities (Figure 1). In Maryland, 36 percent of jobs in Somerset County, a low-lying county on the Eastern Shore of the Chesapeake Bay, will be exposed to flooding by 2050; so will 32 percent of jobs in Worcester County, Maryland’s only oceanfront county. In Virginia, more than 90 percent of jobs in the city of Poquoson will be at risk, and Mathews County and the cities of Portsmouth and Norfolk will see more than 25 percent of their jobs exposed to flooding by 2050.
Figure 1. Percent of Jobs Exposed to 100-Year Flood in 2050 by Census Tract
Combined, Maryland and Virginia spend approximately $560 million per year on economic development incentives. Where we could identify the target locations of these programs and incentives, we saw that coastal counties have benefited from 88 percent of the incentives established by the Maryland Department of Commerce and 39 percent of the grants that were reported by the Virginia Economic Development Partnership.
Much of the spending has been directed to enterprise zones, where it is meant to revitalize neighborhoods and increase private investment in job creation. However, these can be the same communities that are most susceptible to flooding—and flood risks can drive economic problems. Enterprise zones sometimes even are used to spur recovery after a natural disaster such as a flood or hurricane. In our paper, we show that many enterprise zones also coincide with areas that have the highest social vulnerability, which is measured in terms of factors like income, poverty rates, and English language proficiency.
Coordinating Policies on the Coasts
Some organizations already are grappling with how to align resilience policies and incentives for economic development. A September 2022 report from the Federal Emergency Management Agency provides guidance on coordinating community economic development strategies, which regional organizations create to access federal economic development funding, with hazard mitigation and resilience planning. Regional organizations around the Chesapeake Bay have incorporated these suggestions to varying degrees: some community economic development strategies explicitly mention improving development practices for resilience to flooding, while other community economic development strategies only vaguely touch on the threat of natural disasters.
Our findings regarding the current and projected exposure of jobs to flooding suggest that state economic development programs and climate adaptation and resilience policies need to complement each other, given the reality of sea level rise. Coastal economies will be more robust if policies work in sync. In our paper, we provide several broad suggestions:
- Economic development programs at the state and federal levels can require that spending target areas that are outside current and future flood zones. Coastal communities would still receive incentives—but with the condition that businesses are located in areas with limited exposure to flooding, now and in the future.
- Subsidies for enterprise zones can incorporate requirements for resilience, such as supporting the elevation of businesses and other modifications to infrastructure that reduce flood damages and increase preparedness.
- Federal resilience spending—for example, in the Federal Emergency Management Agency’s new revolving loan program—could support the relocation of businesses out of flood zones, with the caveat that the businesses stay in the same community.
- Communities could get bonus points in federal grant programs for adopting zoning rules that encourage or mandate resilience (like this one in Norfolk) or other land use plans that promote a reduction in the exposure of businesses to flood risks.
Ultimately, although supporting economic growth in vulnerable communities is essential, so is ensuring that those jobs will be there to stay—even as sea levels rise. Aligning business incentives and resilience policies will allow for more sustainable development and encourage communities to expand in areas that will keep people safe from harm.