This is not in their promotional material! Why it is foolish to invest in Miami

Miami is trending! In the last weeks, I could observe a growing interest in parts of FinTwit in moving to or investing in Miami. The investor-friendly twitter communication of the mayor Francis Suarez seems to attract the attention of many investors. One example:


By loading the tweet, you agree to Twitter’s privacy policy.
Learn more

Load tweet


Another one:


By loading the tweet, you agree to Twitter’s privacy policy.
Learn more

Load tweet


Congratulation on this impressive impact for the community of Miami, Mayor Francis Suarez! I respect this deeply.

It is a foolish capital allocation decision to invest in Miami

But from a capital allocation perspective investing in or moving to Miami is a deeply foolish idea.

Why do I make this claim?

I want to prevent my readers from following the short-sighted “Miami train”. Thereby, I want to help protecting their capital.

Rule No. 1: Never lose money.

Rule No. 2: Never forget rule No. 1.

Warren Buffett

Here, I want to share many facts with you, that is not a part of Miami’s promotional material. Personally, I see the region of Miami in a downward spiral, that is driven by climate change. I wish it would be different, but Miami is one of the cities, that will be hit hardest by climate change. I want to help long-term investors and founders to understand this.

I am an long-term investor, but also a Human Geographer by training. During my studies, I learned a lot about city and regional development. In February 2020 I had the chance to study Miami’s development trajectories on the ground. In the months before and after I could learn even more about the observations I made.

Every city is built on something – Miami is tragically built on limestone

Climate change goes hand in hand with rising sea levels. Sea level rise is mainly driven by:

  • melting land ice on the poles and in the glaciers,
  • a loss of the special gravity of the ice masses on the poles,
  • and an increase in the volume of seawater due to the hotter planet earth.

Many coastal regions have a chance to manage rising sea levels by building levies. But Miami is built on a special ground, which makes this impossible. The foundation of the city is built on porous limestone. Seawater will push through the holes in the limestone. So, in Miami levies do not help against sea level rise.

Limestone as a foundation to invest in Miami

Official estimates, which seem to underestimate the speed of the sea-level rise, see a sea-level rise by 5 to 8.2 feet (1,5 m till 2,5 m) by 2100. 2 feet could already be reached by around 2040 and 3 feet by around the end of the 2050s. What does this mean for Miami?

This mapping tool lets you observe the impact of different scenarios of sea-level rise. These scenarios only show the level of sea-level rise in “no storm” scenarios. So, the flooding peaks might be even higher.

This a 3 feet (1 m) scenario for Southern Florida, that might come reality around 2050:


In Miami, in a 3 feet scenario parts of the lower inland around the airport and around Northwest 7th Street will be underwater. Also, huge parts of Miami Beach will be permanently flooded. This is a problem for the municipality, as a high part of the tax base lives in Miami Beach.

This is a map of the 5 feet (1,5 m) scenario, that might come to reality in the decade of 2060. Here you more parts of the inland flooded due to water pushing through limestone. The airport – an economical hub – is also heavier affected. Miami Beach might be nearly totally underwater:


The impact of 2 feet higher sea-level: A nuclear and/or environmental catastrophe?

In the chapter above you can observe the impact of 3 feet and 5 higher sea-level, but already 2 feet higher sea-level might have a huge impact on the region of Miami. This scenario can come true in the period of 2039-2051.

In a 2 feet scenario, the South Dade Landfill and the neighboring South District Wastewater Treatment Plant will be impacted. The flooding of these facilities raises questions: How environmentally safe is a flooded landfill? How can the water provision in the region be done if a important wastewater treatment plant is flooded?

Even more worrisome is the potential flooding of parts of the nuclear power plant Turkey Point, which is located south of Miami. Parts of it could be permanently in the flood zone if the sea-level rises 2 feet.

The nuclear power plan Turkey Point has a special design, which makes a flooding even trickier: “Instead of a cooling tower, the plant has a large five-by-two mile (10-square-mile (26 km2)) network of canals covering nearly 6,000 acres (2,400 ha)” [Source].

This is how the canals (grey lines on the right) and the area around them looks today and an in a 2-feet scenario:

I am no expert in nuclear power plants. But I heard they need stable cooling to function properly. I am also not sure that they are easy to run in a flood zone. From what I know about nuclear decommissioning and rebuilding of nuclear power plants, it could also take decades to do that. And I am not sure if this ever has been done safely and cost effective in a flood zone.

Also, the implications for energy safety for parts of Southern Florida are to consider here. The main source of energy seems to be coming from conventional power plants, like the nuclear power plant Turkey Point. Florida is a sunshine state, but it was hard to spot solar cells or even solar plants in the city of Miami. Locals told me, that is also due to good lobbyism by the power plant owners. It will be surely interesting to see how the energy structure will adapt if the nuclear power plant Turkey Point must go offline one day.

Great weather can turn into a lethal heat

Miami and Florida both profit from great weather. Many people are moving there because they want to enjoy the “sunshine state”.

Due to climate change, temperatures and temperature extremes are increasing. Especially in combination with high humidity, high temperatures will become a deadly burden:

By 2050, all 13 cities on the list, including Miami, Tampa, Naples and Vero Beach, will see 100-plus days a year of the miserable mix that can cause a host of health problems and even death […].

Miami Herald – 13 July 2016

In this toxic mix of heat and humidity, it won’t be safe to go outside during the day – for months.

By the way, lethal heat days will become a global problem. This mapping tool lets you analyze Florida and gives you an idea about the global dynamic of increasing lethal heat days.

Let’s talk about leaking toilets? And king tides?

A huge part of a city’s infrastructure is underground. It is electricity or telephone cables, but it is also the sewage system.

Miami-Dade County and Florida do not solely have a classical sewage system. They are also reliant on septic tanks:

“One-third of all Florida homes, about 1.6 million households, use septic tanks” .

Miami Dade Government

A measurable part of these septic tanks in the region of Miami is already leaking or failing – also due to the rising sea. The problem of leaking septic tanks will even get worse in the coming years. Scenarios like these might be more common:

Waste water doesn’t filter like it’s supposed to in soggy soil. In some cases, it comes back out, turning a front yard into a poopy swamp.

There is also another vulnerability of the sewage system to consider. Spencer Glendon quotes a former Governor of Florida on this in his 2019 Sohn Investment Conference presentation:

“All the toilets in Florida flush into the ocean. And as the ocean gets heavier and starts pushing back. This is a big problem.”

Furthermore, so called high or king tides are an increasing problem in Miami. During these flooding events, sea-water gets pushed into the streets of the city. There is a big collection of YouTube videos reporting about this problem. For example:


By loading the video, you agree to YouTube’s privacy policy.
Learn more

Load video


As I had been to Miami in February 2020, I was warned by locals not to swim in the inner-city canals, as nobody really knows what is in them. The same was said about the water of high tides, that are already regularly flooding the streets. Based on the knowledge about the leaking septic tanks and the general dirt, that is in the streets of a city, it seems quite wise to do so.

And what is the finance side of all of this?

The worsening of the environmental conditions truly has a business and financial impact. Here I want to outline three obvious trajectories:

Tourism revenues between lethal heat and toxic algae

Tourism is one of the relevant revenue sources for Florida. Famous sites, like Disneyland, will not be flooded soon. But the increasing levels of heat and humidity will increase the periods of lethal heat days. There could be many weeks or months you cannot safely bear to go outside during the day. It just will not be safe to visit Disneyland or the beach with your kids in this period. They will be closed. Surely, this will be a minus for the tourism industry and the revenues generated from it.

Another minus is already Florida’s toxic algae crisis. Remember – all toilets in Florida flush into the ocean. Antiseptic tanks also ideally filter (or leak) into the ground and then into the sea. The fertilizers of agricultural production are also washed into the sea. Pumps help to prevent streets from being flooded, but they also push all with the water all the unfiltered dirt of cities and cars into the ocean. Combined with climate change this dirt and minerals create very good growing conditions for a toxic algae bloom. These algae kill most life in the ocean and can also be toxic to humans – and especially children:


By loading the video, you agree to YouTube’s privacy policy.
Learn more

Load video


The very fragile real estate economics

Florida charges no personal income tax and has one of the lowest tax levels in the country. For financing their duties, the local authorities are highly dependent on the development of real estate. This model worked for the last decades, as the population in Florida was growing every year, and thereby real estate demand was rising.

The local authorities estimate that this growth of people and real estate demand will continue for the future. But climate change questions these estimates deeply.

If someone wants to buy a house in Florida today, he or she usually underwrites a 30-year credit. Remember how Southern Florida could change by 2050? A possible scenario could contain this:

  • Months of lethal heat
  • Flooded water plants and flooded landfills
  • Maybe also a flooded nuclear plant and a problem with the daily provision of electric energy
  • High tides regularly pushing the content of the leaking septic tanks in the street.

Still, today there is real estate financing going on. But with this future in mind, it is just a question of time till we will see someone hitting the breaks hard.

Spencer Glendon outlines one of the fragilities of Florida’s real estate economy in his 2019 Sohn Investment Conference talk: You can get a 30-year mortgage, but it is a condition that you have insurance. While you still can get 30 years on the credit site, the insurance side only gives you 1 year. According to Spencer Glendon is foreseeable, that there soon will not be any insurance soon in parts of Florida.

Municipal bonds are another fragile part of the system. The ability to (long-term) finance municipalities could soon be questioned as well. This then will cause huge problems in financing investments in real estate growth, which keeps the system going.

Spencer Glendon nails Florida’s dependence on real estate like this:

“When real estate even slows in Florida, the economy will go to hell.”

This could happen tomorrow.

The climate liability you own when you invest in Miami

Another financial aspect extremely worth considering is Florida’s climate liability. To protect the status quo huge investments are needed. During the day lethal heat can be everywhere for months, so you need to invest in cooling. The limestone in the ground makes it very hard to protect communities against rising sea-level, so you, for instance, need to build and run pumps.

Pumps - Invest Miami
A pumping system in Miami Beach

For me, it is very hard to imagine a long-term financing scenario for these needed investments in a (public) system like it is in play in Florida. It is especially hard to imaging such a scenario with the main economic motors’ tourism and real estate – at best – slowing and on top of that a disconnect from the credit markets due to a questioning of the sustainability of the creditworthiness of the municipalities happens.

Miami as well as Florida must invest a lot of money to protect their communities and preserve the status quo for some years or at best decades. We are talking here only about the status quo, which needs billions and billions. Who will they finance this if the economy slows and the access to credit markets dries out? Maybe it is by the remaining taxpayers and local businesses, that are now attracted to Florida?

Do you still think about investing in Miami?

I could have discussed more critical points in my article, like the increase of hurricanes or the concerning impact of climate change on water safety in Florida. But finally, I want to come back to the increasing interest of FinTwit in Miami.

As an entrepreneur and/or investor you must think with a long-term mindset to build your business and portfolio. Ideally, you want to run or own a business, that can grow and compound capital over decades in a stable (business) environment.

Low taxes (for now), a supportive local government (for now), and nice weather (for now) are nice to have, but environmental safety, daily energy safety, a functioning economy around your business, a functioning infrastructure, that can be financed and run for the long-term, and access to credit are also very important. All this is or will be in question in Miami. Therefore, starting or investing in a long-term business in Miami is foolish.

This is how Southern Florida might look like at the end of the century [Source]

Do you want to learn more about the financial challenges climate change brings to cities like Miami

Miami is just an example of the problems, that many regions will face due to climate change. If you want to know more about these global and local problems and their relation to finance, I want to highly recommend these people:

Miami experts – Alex Harris and Prof. Hardol Wanless

Alex Harris is a local journalist reporting about the impact of climate change on the region of Miami. She is on Twitter and some of her articles are publicly available.

">Harold Wanless is a local professor. He did a lot of research on the impact of climate change on Florida. There are some enlightening talks of him on YouTube, like this one he has held recently.

Thinkers on climate & finance – Spencer Glendon & Jeremy Grantham

Spencer Glendon is one of the sharpest thinkers on the financial impacts of climate change. This playlist brings you in touch with his work:


By loading the video, you agree to YouTube’s privacy policy.
Learn more

Load video


Jeremy Grantham is another sharp thinker. In his 80s, the value investor went full into climate investing. It is worth watching his analysis, that collected in this playlist:


By loading the video, you agree to YouTube’s privacy policy.
Learn more

Load video


Written by:

157 Posts

Tilman is a very enthusiastic, long-term investor. Over the last years he has taught himself important investing concepts autodidactically. He tries to combine a positive climate and environmental impact with his investments.
View All Posts
Follow Me :