The BP DeepWater Horizon oil spill will cost homeowners n in the coastal counties along the Gulf Coast communities from $648 million over one year and to as much as $3 billion over five years, according to a report today from CoreLogic.
If the unlikely worst-case scenario occurs and the spill reaches around the Florida Keys and up the Atlantic coast of Florida impacting beach amenities, the additional losses could reach up to $28 billion over five years.
In the coastal counties of Harrison, Mobile, and Escambia, there are more than 71,000 homes that will potentially be impacted. In addition, there are 15 major counties stretching from the Gulf coast of Mississippi to the Atlantic coast of Florida with more than 600,000 residential properties within 1,000 meters of the coastline.
CoreLogic took into account the annualized economic value of beach access in these coastal communities at risk of being damaged by oil coming ashore and beaches being closed to human recreational use for a period of five years. Buyers of homes in these coastal communities paid premiums when they purchased their homes for access to the beaches and the amenity benefits that they represent.
CoreLogic used its public record and parcel data collected in the 15 at-risk counties and combined this with its proprietary geospatial coastline data that accurately identifies the geographic location of the shore. Based on a geospatial query of the public record data using the coastline file, more than 600,000 properties were identified as being within 1,000 meters of the coastline in 15 counties, representing major beach communities stretching from the Gulf coast of Alabama to the Atlantic coast of Florida.
“Using well established economic techniques for the measurement of the economic value of environmental amenities an estimate of the loss in beach amenity value is substantial. While it is by no means a certainty that the major coastal communities along both coasts of Florida will be impacted at all by the oil spill, the lost amenity value in these markets could be particularly high,” said Mark Fleming, chief economist with CoreLogic. “The total loss in amenity value in communities already being impacted by the oil spill to date is potentially as high as $3 billion over five years. Our hope is that the oil spill is contained and the loss in amenity value is further moderated by a speedy cleanup and a return of beach amenities to the affected communities’ homeowners.”