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184 assessment of climate change in the southwest united statesinfrastructure, and people along the coast—which historically has resulted in the tendencyto protect and harden developed shorelines—is expected to increase the risk ofloss of the remaining natural coastal ecosystems in these areas (see Box 9.4) (CNRA2009; Hanak and Moreno 2011). About 40% of the backshore area (above the high-waterline) along the California coast is in public ownership (federal and non-federal) ii (US-ACE 1971), about 107 miles or 10% of the state’s coastline had already been hardenedas of 2001 (Griggs, Patsch, and Savoy 2005), and more than 90% of the coast’s historicalwetland areas have been lost or converted due to diking, drainage, and development(Dahl 1990; Van Dyke and Wasson 2005; Gleason et al. 2011).The Role of Insurance and Incentives in Coastal DevelopmentBox 9.4Many federally and state-funded actions and programscontinue to protect and subsidize high-riskcoastal development by shifting the cost of floodprotection and storm recovery from propertyowners and local governments to state and federaltaxpayers. For example, the Federal EmergencyManagement Agency’s (FEMA) National FloodInsurance Program (NFIP) offers flood insurancerates that do not reflect the full risk that policyholdersface. In addition, the Army Corps of Engineersfrequently funds and executes structuralshoreline protection projects, while federal andstate post-disaster recovery funding and assistanceencourages replacing or rebuilding structureswith a high level-of-risk exposure (Bagstad,Stapleton, and D’Agostino 2007). These programswork together to distort market forces and favorthe movement of people to the coasts. Meanwhile,reinsurance companies and experts studyingthe insurance market increasingly urge thatpremiums better reflect actual risks to ensure areliable insurance system as climate risks increase(Lloyd’s of London 2006, 2008; Kunreuther andMichel-Kerjan 2009; Pacific Council on InternationalPolicy 2010).The NFIP is over-exposed and is running adeficit as of 2010 of nearly $19 billion (WilliamsBrown 2010). To reduce the financial burdens onthe flood insurance program and decrease overallvulnerability, FEMA also administers severalgrant programs designed to mitigate flood hazardsprior to disasters occurring (FEMA 2010).These programs are often used for pre-disasterstructural flood mitigation measures, but havealso been used for structure acquisition, propertybuy-outs, and demolition or relocation (MultihazardMitigation Council 2005). The resulting openspace is required to be protected in perpetuity, simultaneouslyproviding natural resource benefitsand vulnerability-reduction benefits (FEMA 2010).As mentioned previously, in 2011 the California Ocean Protection Council issuedinterim sea-level rise guidance for state and local agencies, thus implementing one ofthe key strategies proposed in California’s first statewide climate change adaptationplan (CNRA 2009; California Ocean Protection Council 2011). While not mandatory, thisguidance gives state and local government agencies and officials a scientific basis to vetplanning and permitting decisions. The guidance will need to be updated regularly as