Unpriced climate risk and the potential consequences of overvaluation in US housing markets

Nature Climate Change - Tập 13 Số 3 - Trang 250-257 - 2023
Jesse D. Gourevitch1, Carolyn Kousky1, Yanjun Liao, Christoph Nolte2, Adam Pollack3, Jeremy R. Porter4, Joakim Weill5
1Environmental Defense Fund, San Francisco, CA, USA
2Department of Earth and Environment, Boston University, Boston, MA, USA
3Thayer School of Engineering, Dartmouth College, Hanover, NH, USA
4First Street Foundation, Brooklyn, NY, USA
5Federal Reserve Board of Governors, Washington, DC, USA

Tóm tắt

AbstractClimate change impacts threaten the stability of the US housing market. In response to growing concerns that increasing costs of flooding are not fully captured in property values, we quantify the magnitude of unpriced flood risk in the housing market by comparing the empirical and economically efficient prices for properties at risk. We find that residential properties exposed to flood risk are overvalued by US$121–US$237 billion, depending on the discount rate. In general, highly overvalued properties are concentrated in counties along the coast with no flood risk disclosure laws and where there is less concern about climate change. Low-income households are at greater risk of losing home equity from price deflation, and municipalities that are heavily reliant on property taxes for revenue are vulnerable to budgetary shortfalls. The consequences of these financial risks will depend on policy choices that influence who bears the costs of climate change.

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Nature Climate Change

Tập 13 Số 3

250-257

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