Modeling the Economics of Beach Nourishment Decisions in Response to Coastal Erosion

Beaches are constantly moving and changing. The dynamic transformations of beaches are mostly the result of the erosion of sand, which can occur through movements alongshore caused by waves, movements off-shore due to storms, or submersion due to sea-level rise. Predicted climate change impacts include potential changes in storminess and accelerated sea-level rise, which will lead to increased coastal erosion. At the same time, the number of people residing in coastal communities is increasing. The risks from eroding beaches (increased coastal flooding, damage to infrastructure, and displaced residents) are therefore increasing in number and scale; and coastal residents are taking actions to protect their homes. One such action is beach nourishment, where sand is added to a resident's property in order to widen the beach. We have developed an economic model of beach nourishment decision-making to investigate the relationship between the optimal volume and timing of beach nourishment and factors such as property value, erosion rate, and initial beach width. In this model, waterfront property owners nourish a beach when the losses in net rental income exceed the costs incurred from nourishing the beach. (Rental income is a function of property value, which in turn depends upon the width of the beach.) It is assumed that erosion and sea-level rise are related. We examine different nourishment scenarios, including one-time nourishment in the first year; constant annual nourishment; and a myopic decision process in which the homeowner nourishes the beach if property losses from erosion over the next five years are expected to exceed the cost of nourishment. One-time nourishment delays property flooding for both constant and accelerating sea level rise; however, this delay is more substantial under constant sea level rise. With continual nourishment, the beach can be maintained under constant sea-level rise, provided that the erosion rate is comparable to the additional width from nourishment each year. In contrast, for practical nourishment volumes, erosion from accelerating sea-level rise eventually out-competes beach nourishment and inundation occurs. Under the myopic decision-making model, with both constant and accelerating sea-level rise, nourishment does not take place until a property is critically endangered. The beach slope, nourishment volume, property value, and initial beach width all are found to be important factors in determining when nourishment should start and how frequently it should occur thereafter. These models can be used by policy-makers to formulate better coastal management policies, by coastal geologists to understand human impacts on beach dynamics, and by the insurance industry to realistically anticipate human risk-taking and decision-making.