Land Use Adaptation to Climate Change: Economic Damages from Land-Falling Hurricanes in the Atlantic and Gulf States of the USA, 1900–2005

Global climate change, especially the phenomena of global warming, is expected to increase the intensity of land-falling hurricanes. Societal adaptation is needed to reduce vulnerability from increasingly intense hurricanes. This study quantifies the adaptation effects of potentially policy driven caps on housing densities and agricultural cover in coastal (and adjacent inland) areas vulnerable to hurricane damages in the Atlantic and Gulf Coastal regions of the U.S. Time series regressions, especially Prais-Winston and Autoregressive Moving Average (ARMA) models, are estimated to forecast the economic impacts of hurricanes of varying intensity, given that various patterns of land use emerge in the Atlantic and Gulf coastal states of the U.S. The Prais-Winston and ARMA models use observed time series data from 1900 to 2005 for inflation adjusted hurricane damages and socio-economic and land-use data in the coastal or inland regions where hurricanes caused those damages. The results from this study provide evidence that increases in housing density and agricultural cover cause significant rise in the de-trended inflation-adjusted damages. Further, higher intensity and frequency of land-falling hurricanes also significantly increase the economic damages. The evidence from this study implies that a medium to long term land use adaptation in the form of capping housing density and agricultural cover in the coastal (and adjacent inland) states can significantly reduce economic damages from intense hurricanes. Future studies must compare the benefits of such land use adaptation policies against the costs of development controls implied in housing density caps and agricultural land cover reductions.