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Climate Change Bankruptcy

The Law Offices of Michelle Labayen, PC | September 3, 2021

The New York Times recently published an article "Climate Change is Bankrupting America's Small towns" analyzing the impact that the recent hurricanes and other natural disasters are economically ruining communities. On a larger scale, local residents across New Jersey and New York City experienced historic flooding and damage caused by Hurricane Ida; even this devastation pales in comparison to the flooding in New Orleans and across the south. The increased damage, intensity, and occurrence of natural disasters, as well as record high heat waves, are all caused by climate change. This leads to a big unknown about what we can expect in the future in regards to the safety of our homes, businesses, and communities.

Climate change coupled with Covid-19 creates a two-packed punch of the economic crisis of affording rent coupled with the physical repairs caused by intense natural disasters. The New York Times uses the town of Fair Buff, South Carolina as its model for similar towns across America facing bankruptcy. The issue is that natural disasters are slowly responded to by the federal government since systems used by the Obama administration (including FEMA, HUD, and Army Corps of Engineers) were gutted by the Trump administration. Meanwhile the local government puts a majority of the responsibility on its residents, leading to prolonged damages to buildings, streets, and public services. This causes its residents to leave the town and seek a livelihood elsewhere.

As Christopher Flavelle from the New York Times stated: "Rather than bouncing back, places hit repeatedly by hurricanes, floods and wildfires are unraveling: residents and employers leave, the tax base shrinks and it becomes even harder to fund basic services."

Towns like Fair Buff turn into ghost towns as businesses shut down, either due to lack of business, the owner moving elsewhere, or even a combination of the two. The image of Fair Buff was described as close to dystopian with empty storefronts, an American flag stuck in the debris of a collapsed building, and speakers blasting music from the Methodist Church being heard by no one. The residents of Fair Buff on average make $20,000 yearly, a majority are retired, "and just one-third have jobs". To repair the downtown area would cost an estimated $10 million which the town can't come close to affording. The EDA is attempting to build a commercial building while other "federal agencies are paying residents to leave" such as the Federal Emergency Management System and US Department of Housing and Urban Development.

This issue represents the national question of what makes most sense financially and for public safety; does it make sense to repair a community that will repeatedly be destroyed? The government could invest in building a town more capable of withstanding these catastrophes, or even invest in maintaining the safeguards in place with climate change in mind. The New York Times used the town of Princeville, North Carolina as a parallel example. The Army Corps of Engineers built a levee in 1976 which has since been neglected and no longer protects the town. A levee in 1976 cannot compare to the record breaking flooding in 2021, especially without repair for almost 4 decades. Bobbie Jones, the mayor of Princeville, is attempting to refurbish the town since its historical significance is too precious to abandon the town altogether. However, his efforts and joint agencies are undermined by the frequent government buyouts of residential homes, leading to the decrease in tax income, businesses, etc.

This cycle is so vicious without any clear end in sight with the threat of climate change only increasing. Some towns propose that they'll eventually become a campsite for RVs. Others hope to preserve their way of life and somehow find the funds through grants or disaster relief funds. Buying out the town seems to be avoiding the issue altogether by ignoring it since there will be less and less "safe" places to relocate these residents. If a city as great and populated as New York can be literally sunk by climate change, then the best plan would be to take action before its too late.

Image credit: Jarrod Carruthers via Flickr

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About Michelle

Michelle Labayen has been practicing Consumer and Bankruptcy law for more than 17 years. She is a member of the National Association of Consumer Bankruptcy Attorneys (NACBA), and the National Association of Consumer Advocates (NACA). In addition, she is a Max Gardner Bootcamp graduate.

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