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Abstract

Climate change poses a significant threat to the health and safety of New Jersey’s coastal communities. Scientists predict rising sea levels and intensifying storms will bring increased flooding, erosion, and other climate-driven coastal hazards. In January 2026, the New Jersey Department of Environmental Protection (“NJDEP”) adopted the Resilient Environments and Landscapes (“REAL”) rule amendments. While the REAL rules made New Jersey the first state to adopt forward-looking climate-adaptation land-use regulations, New Jersey’s economic and environmental interests conflict. The REAL rules lack sufficient funding to support compliance without deterring development. Further, the high costs associated with sustainable development risk that developers will choose to build in states with more lenient environmental regulations. This Note argues that New Jersey’s mandate-only approach creates a dangerous split-incentive problem between the state’s short-term economic development goals and its long-term climate resilience strategy. As a result, the current adaptation plan risks both economic stagnation in the state and inadequate climate protection for climate risks.

This Note proposes a Climate Resilience Corporate Tax Credit to solve the REAL rule’s funding gap. The proposed credit allows developers in coastal zones to offset compliance costs by following or exceeding the REAL rules’ mandates. The proposed credit will align the competing objectives of the New Jersey Department of Environmental Protection and the New Jersey Economic Development Authority by incentivizing investment and development despite stricter environmental regulations. The long-term economic benefits of investing in climate-resilient development to prevent future climate damage outweigh the short-term downsides of reduced tax revenue. Therefore, the proposed tax credit is not only environmentally essential, but also economically sensible.

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