Document Type


Publication Date

Fall 9-2016


California’s coast is one of the state’s and the nation’s premier locations. Home to millions of people, as well as a great diversity of natural features and habitats, it is also a place that is disappearing from beneath our feet. The dynamic interactions of water and land have eroded much of the historic California coast, and sea level rise threatens a dramatic acceleration of this trend. Fighting erosion has led to more than ten percent of California’s shoreline (and over thirty percent in southern California) being transformed from natural to man-made structures that resist, at least for a time, the forces of wind and wave.

But the fortress undermines itself. Sea walls and armoring protect properties for a time, but result in accelerated erosion nearby, and eventually disrupt the dynamics of the entire coastal system. The regulatory system governing shoreline management under the California Coastal Act (“Coastal Act”) is complex and is generally designed to discourage armoring. In choosing armoring, shorefront property owners not only commit to an enormous expenditure of money to construct and maintain the structure, but also engage in a time-consuming, contentious and expensive process to get approval for their actions. The costs to the owners are matched, or exceeded, by the administrative burden borne by public agencies – in this case local governments and the California Coastal Commission – charged with granting approval.

Alternatives to coastal armoring in the form of natural infrastructure are now viable alternatives to engineered structures in many situations. Wetlands, dunes, oyster beds, and kelp forests are natural features that enhance the ability of both human and natural systems to respond to sea level rise. Such “natural infrastructure” can be cost effective, or at least cost competitive, with hard armoring responses, particularly over the extended periods required in the face of rising seas. Despite the advantages of these approaches, the regulatory regime does little to encourage their use, and they have been rarely deployed.

To achieve the Coastal Act’s purposes in an era of steadily increasing threats to shoreline properties from rising sea levels, California will have to find ways to provide incentives for property owners to deviate from business-as-usual practice of shoreline armoring. The current approach certainly permits natural infrastructure to be used, and can be seen as generally supportive of the idea, but the current process does not send strong enough signals to property owners and can take inordinate time to arrive at decisions. The time spent reviewing every single property owner’s actions will become a major burden on regulators and the regulated community as flooding events become both more common and more damaging.

We believe it is possible to do better. Similar inefficiencies in other environmental regulatory processes have led to the development of markets for tradable permits that can achieve better environmental results at lower costs. Such systems as “cap and trade” air quality regulation and transferable development rights in land use have been widely and successfully deployed in the U.S. and other countries.

In this paper we draw on this experience to propose a tradable permits system that can make shoreline protection both more available when needed and less environmentally damaging when used. We define objectives for such a system based on the principles espoused by the Coastal Act and on experience with other tradable permits. We evaluate the prototype against the known characteristics of successful permit market systems. We conclude that a market-based tradable permit system for shoreline protection for California is feasible and identify a number of legal and policy issues to be investigated further.


Less Bureaucracy and Better Protection for the California Coast? This paper presents an Innovative Market-Based Solution. The Center for the Blue Economy and the Nature Conservancy put forward the concept of a market-based tradable permit system for shoreline protection. The incentive for land owners is a simpler system to navigate with less time for permitting (currently it can take years to get any kind of permit). The incentive from the environmental policy side is a more holistic, nature-based management approach that will look at the entire coastline and the effects of each individual action on the entire system. Initial outcomes of this study show that indeed this marketplace approach is less hassle for homeowners while improving ecological impacts.