The next wave of foreign investors? They could be American
Wealthy Californians have long viewed Vancouver as an attractive travel destination. But as the effects of climate change continue to intensify, we might have a hard time getting them to leave
August 11, 2016
If you think the recent wave of offshore investors has hollowed out Vancouver and turned it into a grossly unaffordable wasteland for a global moneyed diaspora, wait until you see what climate change might do. Because in addition to swamping island nations, killing off coral reefs, and melting Santa’s workshop, it also means that wealthy American climate migrants could start arriving at the Peace Arch border, clamouring to share our unspoiled water and clean air—and buy our real estate. And if you believe Giles Slade, there could be an awful lot of them headed our way.
The Richmond author’s 2014 book, American Exodus: Climate Change and the Coming Flight for Survival, describes a dystopian North America not far in the future. It’s one in which the American southwest is ravaged by a drought far worse than the Dust Bowl of the 1930s, and a tidal wave of “climate refugees” heads north to knock on Canada’s door. But this time it won’t be Okies in clapped-out Model Ts with mattresses strapped to the roof. “I think it’s a bit like the late 1920s or very early 1930s under fascism in Germany,” Slade says in an interview. “The smart, the bold, and the rich move first because they see the trend or they can see that conditions are much more attractive elsewhere.” And there won’t be many places with conditions more attractive than B.C.
Why will climate migrants forsake the sunny states of California, Arizona, or Nevada—places that until recently were a mecca for sun-starved retirees? In a word: water. In Slade’s view, civilization is like a giant game of Jenga, interrelated systems all stacked upon each other so that if you pull out a strategic block—in this case, water—the rest come tumbling down. If the California economy and environment collapse, and the wealthy light out for literally greener pastures, one of those pastures could easily be B.C., according to Slade.
No, B.C. won’t be immune to the effects of climate change, such as more frequent seasonal droughts, rising sea levels, and longer (and more intense) fire seasons. But Vancouver has a big advantage over Californian cities: namely, the wet winters that generally keep the three regional water reservoirs full. Combined with Metro Vancouver and B.C. government strategies to mitigate climate impact, which include water conservation measures, the chances are pretty good that the West Coast of Canada won’t be nearly as hard hit as its southern neighbours.
As such, Slade’s doomsday hypothesis for the States isn’t entirely without merit. The most obvious piece of supporting evidence, according to SFU geography professor Simon Donner, is the fact that the American southwest, and California in particular, is already in the grip of a crushing drought. “The key concern is declining water levels in the rivers and the groundwater, due to extreme heat, changes in rainfall, and declining snowpack in the mountains,” he says. The Colorado River Basin, which supplies 16 percent of California’s surface water via two huge aqueducts that cut through mountains, is entering its 16th consecutive year of drought. Over two-thirds of water from the river is used by farmers, who have thus far resisted Governor Jerry Brown’s attempts to reform the water allocation system.
What happens if Brown and his successors continue to fail? Consider Steve Yuhas, a resident of affluent Rancho Santa Fe who was made (in)famous by the Washington Post after he complained on social media that he and his neighbours paid a lot of property tax and “should not be forced to golf on brown lawns.” There are plenty of Steve Yuhas in California. The state is home to 131 billionaires, and it created 23 of them in 2014 alone, according to Forbes. A third of those entrepreneurs made their fortunes in the tech industry—which also has a thriving pod in Vancouver—while many others made theirs in film, media, and culture. California also has the largest population of millionaires in the U.S., with more than 13,000 of them as of 2015. In other words, there are going to be plenty of folks peeking over the fence at Vancouver when things get too hot in their own backyard.
This is important, given that the capital currently driving Vancouver’s real estate market to new (and increasingly ludicrous) heights also comes largely from the super rich. They’re people who UBC sociologist Rima Wilkes calls “cosmopolitans” because they can afford to live in global cities like New York and London (and Los Angeles and San Francisco, too). The first wave of wealthy Chinese immigrants may have come to take advantage of Canada’s generous immigrant investor program, which was suspended in 2012 and cancelled two years later (except in Quebec, where it still operates), but the last few years have seen a full-on capital flight from that region. Investors and companies took $676 billion out of China in 2015, according to the Institute of International Finance, and plowed much of it into foreign real estate—including, it stands to reason, in Vancouver.
California isn’t as big as China, of course, and so the impact of its residents moving into the Vancouver real estate market won’t be nearly as profound. But it still has nearly 39 million people, and all those millionaires (and billionaires) and their potential migration could apply pressure to a housing market that’s already being hit from all sides. And that, Wilkes says, is the danger. Right behind one wave of immigrant investors could come another, not just from the southwestern U.S. but also from other regions around the world ravaged by climate change. That would almost certainly exacerbate all the negative side effects that have already been created—and continue to be created—by record-high real estate prices. “I think the issue is that, globally, it’s this elite that can just keep buying stuff, second homes and all that, when [middle-class] people in Vancouver can’t get anything, can hardly rent an apartment,” Wilkes says.
That said, American immigration from southwestern states like California could have a more positive economic impact than the current wave of investors, which some worry is more interested in parking capital rather than building successful businesses in B.C. “I think the kind of businesses that are trying to relocate out of California, out of San Francisco and Los Angeles, now will start to consider B.C.,” Slade says, referring to the migration of more than 9,000 businesses from the Golden State over the past seven years. Some of those firms pulled up stakes for neighbouring Oregon and Washington, and the combination of the climate crisis in California and Vancouver’s drive to become the world’s greenest city might be enough to lure some environmentally conscious entrepreneurs north of the border.
For his part, Slade thinks the American exodus has already begun, albeit in a minor way. But he believes it has the potential to become much bigger if the southwestern U.S. doesn’t resolve its water and drought issues—and he’s not optimistic that it will. “I think as the economy collapses, and there’s not much room for amelioration, then people will start considering moving to other places,” he says. If they do, we might have to add another casualty to the growing list associated with climate change: the last shreds of aspiration of young Vancouver homeowners.