Managed Retreat Toolkit

Market-Based Tools

Among a suite of planning, infrastructure, acquisition, and regulatory tools, state and local governments can also consider “market-based tools” or financial incentives — like Transfer Development Rights (TDR) programs or tax credits — to encourage people to move away from, protect, or relocate structures in areas on the coast that are identified for open space preservation or conservation. In addition, governments can also use market-based tools to increase density in higher ground or inland urban or suburban areas. States, municipalities, and communities from across the country have expressed an interest in using market-based tools to facilitate managed retreat; however, there are currently few examples of how these tools have been directly applied to implement managed retreat as a coastal adaptation strategy. There are likely several reasons why these examples are rare, including two worthy of particular note. First, while market-based tools are often favored as cost-effective policy instruments, market-based tools for managed retreat will have to overcome the unique challenge of creating incentives that will encourage people to phase out or relocate or remove development in vulnerable, but highly desirable coastal areas and/or move away from the coast. Second, given the voluntary nature of market-based tools, governments will also have to evaluate how to raise public support for and awareness of these types of programs and how to design incentives in ways that maximize participation as sea-level rise increases. In short, governments will have to comprehensively value the community and environmental benefits of managed retreat and be able to communicate those benefits in a way that will encourage public participation in the absence of an enforcement mechanism. As coastal states and communities continue to innovate in this space, this section will be updated as more tools and case study examples become available. 

This section will introduce different types of market-based tools that state and local coastal governments could include as part of a comprehensive managed retreat strategy.

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