Shoreline Defense Against Climate Change and Capitalized Impact of Beach Nourishment

Beach communities respond to storm risks through shoreline stabilization policies and often rebuild eroding beaches with sand dredged from offshore locations and inlets. Investments in natural capital through beach nourishment are, at least partly, capitalized in coastal property values. We combine data on housing sales between 2008 and 2014 in Dare County, North Carolina with geo-spatial information on the timing and location of the first beach nourishment in the town of Nags Head to estimate the perceived risk-reduction effect, using Hurricane Sandy as a natural experiment. We find that the effect is heterogeneous both within and across nourished and unnourished regions. Triple difference estimates reveal that investment in nourishment results in a price premium of 11.7% to 16.5% for oceanfront homes located in a nourished beach. Converting the average treatment effect of 13.4% from our preferred model to aggregate benefits capitalized by oceanfront homes in Nags Head suggests that the value of beach nourishment exceeds $16 million.