Journal article
Unpriced climate risk and the potential consequences of overvaluation in US housing markets
Nature climate change, Vol.13(3), pp.250-257
03/01/2023
DOI: 10.1038/s41558-023-01594-8
Abstract
Climate 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.
Details
- Title: Subtitle
- Unpriced climate risk and the potential consequences of overvaluation in US housing markets
- Creators
- Jesse D. Gourevitch - Environmental Defense FundCarolyn Kousky - Environmental Defense FundYanjun (Penny) Liao - Resources For The FutureChristoph Nolte - Boston UniversityAdam B. Pollack - Dartmouth CollegeJeremy R. Porter - First St Fdn, Brooklyn, NY USAJoakim A. Weill - Federal Reserve Board of Governors
- Resource Type
- Journal article
- Publication Details
- Nature climate change, Vol.13(3), pp.250-257
- DOI
- 10.1038/s41558-023-01594-8
- ISSN
- 1758-678X
- eISSN
- 1758-6798
- Publisher
- NATURE PORTFOLIO
- Number of pages
- 12
- Grant note
- ICER-2103754 / National Science Foundation under the Megalopolitan Coastal Transformation Hub
- Language
- English
- Date published
- 03/01/2023
- Academic Unit
- School of Earth, Environment, and Sustainability
- Record Identifier
- 9985113008402771
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