Styrofoam Insulation - Good or Bad Idea?

A common retrofit in my area is Styrofoam rigid insulation board applied to the exterior, under siding. I'm in a very damp climate (St. Johns, Newfoundland and Labrador, Canada). If installed correctly, is this a safe option that won't rot my house? Its popularity does not automatically instill confidence, as there is a questionable relationship between building science and actual practice around here.

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