Decentralized Management Hinders Coastal Climate Adaptation : The Spatial-Dynamics of Beach Nourishment

Climate change threatens to alter coastline erosion patterns in space and time and coastal communities adapt to these threats with decentralized shoreline stabilization measures. We model strategic interaction between two neighboring towns, and explore welfare implications of spatial-dynamic feedbacks in the coastal zone. When communities are adjacent, the seaward community loses sand to the landward community through alongshore sediment transport. Strategic interactions create incentives for both communities nourish less, resulting in lower long-run beach width and lower property values in both communities, a result that parallels the classic prisoner's dilemma. Intensifying erosion — consistent with accelerating sea level rise — increases the losses from failure to coordinate. Higher erosion also increases inequality in the distribution of benefits across communities under spatially coordinated management. This disincentive to coordinate suggests the need for higher-level government intervention to address a traditionally local problem. We show that a spatially targeted subsidy can achieve the first best outcome and explore conditions under which a second-best uniform subsidy leads to small or large losses