Houston Chronicle Op-Ed
Some of Texas’ most valuable real estate lies in areas that will likely be inundated as the Gulf of Mexico rises, and as land subsides. High-value facilities for oil transport, refining, shipping, defense, and industry will gradually be pushed into the high-risk flooding category as high tide lines and storm surges march inland.
In fact, when it comes to the potential risks to coastal real estate from climate change, Houston is among the most vulnerable cities, and Texas among the most vulnerable states, in the United States. About one-third of the state’s GDP is generated in coastal counties. According to the best available science, sea levels at Galveston, for instance, will likely rise by 1.5 to 2 feet by mid-century, and 3.2 to 4.9 feet by the end of the century, with a 1-in-100 chance of a rise of more than 7.6 feet.
I serve on the leadership committee for the Risky Business Project, which focuses on the economic risks of climate change in the U.S. Our research has found that $20.9 billion worth of Texas coastal property is likely to be flooded at high tide by the year 2030. Much of this high-risk property is located in the Greater Houston: The lands around Buffalo Bayou, Burnet Bay, Crystal Bay, Bear Lake, and Upper San Jacinto Bay – the heart of Houston’s oil and gas transport infrastructure, along with prime residential real estate – all face significant risks of inundation from rising waters.
These risks grow worse with time. By 2050, the value of Texas properties below the mean high water mark will likely increase to nearly $30 billion. This may seem far off, but many of the current bonds and mortgages funding these properties won’t mature until the mid-2030s or later. And the insurance industry may decide the risks are too great and dramatically raise rates or, worse, abandon the Texas coast altogether – as they are already doing in states such as Florida and Louisiana.
Many of our inland residents will also have to contend with a growing number of days of extreme heat. Of course, in Texas, we’re used to warm weather. But we’re not used to the kinds of heat that scientists suggest will result from unmitigated climate change, and many of our most productive industries could be hit hard. If we stay on our current path, parts of Texas will likely experience from 74 to 106 days above 95 degrees each year by 2040-2059; over the longer term, that kind of heat will be normal for nearly half the year. For comparison, over the past three decades, Texas has seen an average of just 43 days per year with this kind of heat.
Studies show that as heat rises, workers in outdoor industries such as agriculture, transportation, and manufacturing become less productive. Texas has enjoyed recent gains in labor productivity, but these are at risk as a result of climate change. In fact, Texas is likely to have the steepest labor productivity penalties from warmer temperatures of any state, with up to a 1.1 percent penalty by 2020–2039, and up to a 1.7 percent penalty in the following 20 years.
Extreme heat will also likely reduce the productivity of many of our staple agricultural crops, like corn and cotton. Absent significant adaptation by farmers, corn yields in Texas will likely decrease by up to 22 percent by 2020–2039; cotton output will likely drop by up to 6.3 percent; and soybean production is likely to drop by as much as 17 percent.
While we can’t be 100 percent certain that these risks will become reality, in business, there is no such thing as 100 percent certainty. Business and investment decisions are made within the framework of risk and reward, grounded in the best available data. And the data is alarming: As a real estate developer and investor, I can understand if bankers and investors would look askance at a Texas property if it’s likely to be under water in the next 15 years.
Business leaders in Texas should take a hard look at the data, and recognize that we can act to reduce our exposure to climate risks. We should also engage in the robust international dialogue about the role business must play in addressing climate change.
But we shouldn’t pretend Texas is somehow immune. By actively managing our exposure to climate risk, we can make sure that climate change doesn’t mess with Texas.
Cisneros is chairman of CityView and former Secretary of the U.S. Department of Housing and Urban Development.