Optimal real estate capital durability and localized climate change disaster risk

Bunten, Devin Michelle; Kahn, Matthew E.

doi:10.1016/j.jhe.2017.01.004

Cited by 36 publications

(27 citation statements)

References 27 publications

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“…This comparative static also illustrates the allocative ine¢ ciency resulting from heterogeneous ‡ood risk beliefs. Importantly for our purposes, however, (16) highlights why the presence of some market participants with realistic ‡ood risk beliefs is not necessarily su¢ cient to ensure that those risks are fully capitalized into coastal housing prices, in line with the empirical evidence.…”

Section: Casementioning

confidence: 70%

Flood Risk Belief Heterogeneity and Coastal Home Price Dynamics: Going Under Water?

Bakkensen¹,

Barrage²

2017

106

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How do climate risk beliefs affect coastal housing markets? This paper provides theoretical and empirical evidence. First, we build a dynamic housing market model and show that belief heterogeneity can reconcile the mixed empirical evidence on flood risk capitalization into housing prices. Second, we implement a field survey in Rhode Island. We find significant heterogeneity and sorting based on flood risk perceptions and amenity values. Third, we calibrate the model and estimate that coastal prices currently exceed fundamentals by 10%. Ignoring heterogeneity leads to a four-fold underestimate of future coastal home price declines due to sea level rise.

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Section: Casementioning

confidence: 70%

Flood Risk Belief Heterogeneity and Coastal Home Price Dynamics: Going Under Water?

Bakkensen¹,

Barrage²

2017

106

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“…The third pathway relates to the unintended consequences of making public investments in the engineered resilience of buildings and infrastructure (Ayyub 2014, Cerè et al 2017. As a consequence of these investments, the underlying property increases in value by virtue of the fact that the positive externalities associated with performance of the resilience investments represents a superior outcome to the status quo-even when netted-out by any costs associated with the taxes for building and maintaining the resilience infrastructure (Bunten and Kahn 2017). Therefore, any tax consequences associated with the investments would be absorbed by increases in property valuation and/or rent payers.…”

Section: Climate Gentrificationmentioning

confidence: 99%

Climate gentrification: from theory to empiricism in Miami-Dade County, Florida

Keenan

Hill

Gumber

2018

Environ. Res. Lett.

223

131

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This article provides a conceptual model for the pathways by which climate change could operate to impact geographies and property markets whose inferior or superior qualities for supporting the built environment are subject to a descriptive theory known as 'Climate Gentrification.' The article utilizes Miami-Dade County, Florida (MDC) as a case study to explore the market mechanisms that speak to the operations and processes inherent in the theory. This article tests the hypothesis that the rate of price appreciation of single-family properties in MDC is positively related to and correlated with incremental measures of higher elevation (the 'Elevation Hypothesis'). As a reflection of an increase in observed nuisance flooding and relative SLR, the second hypothesis is that the rates of price appreciation in lowest the elevation cohorts have not kept up with the rates of appreciation of higher elevation cohorts since approximately 2000 (the 'Nuisance Hypothesis'). The findings support a validation of both hypotheses and suggest the potential existence of consumer preferences that are based, in part, on perceptions of flood risk and/or observations of flooding. These preferences and perceptions are anticipated to be amplified by climate change in a manner that reinforces the proposition that climate change impacts will affect the marketability and valuation of property with varying degrees of environmental exposure and resilience functionality. Uncovering these empirical relationships is a critical first step for understanding the occurrence and parameters of Climate Gentrification.

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“…Long-lasting community and individual investments are often made to mitigate potential harms from environmental change. These investments are known as durable goods or defensive expenditures (e.g., Bunten and Kahn, 2017), and they tend to be large purchases. At the household level, a family may decide to invest in a truck with high ground clearance in order to avoid having their daily commute impacted by recurrent nuisance flooding.…”

Section: Government and Household Spending For Climate Change Adaptationmentioning

confidence: 99%

“…The study of migration in response to coastal environmental change is a broad topic that touches on many academic fields, including demography (Hauer et al, 2016), anthropology (Oliver- Smith, 1996), human geography (Colten et al, 2008;McLeman, 2017), history (Gutmann and Field, 2010), psychology (Thompson et al, 2017), political science (Aldrich, 2012), sociology (Myers et al, 2008;Meyer et al, 2018), and economics (Bunten and Kahn, 2017). These various fields approach the problem with different theories, data and methodologies.…”

Section: Migrationmentioning

confidence: 99%

Understanding the Long-Term Evolution of the Coupled Natural-Human Coastal System: The Future of the U.S. Gulf Coast

Glickson¹,

Özkan-Haller²,

Carter³

et al. 2018

Geological Society of America Abstracts With Programs

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Division), and Eric White (The Water Institute of the Gulf). The committee would also like to thank Brad Murray of Duke University, who provided information to the committee via a webinar. This Consensus Study Report was reviewed in draft form by individuals chosen for their diverse perspectives and technical expertise. The purpose of this independent review is to provide candid and critical comments that will assist the National Academies of Sciences, Engineering, and Medicine in making each published report as sound as possible and to ensure that it meets the institutional standards for quality, objectivity, evidence, and responsiveness to the study charge. The review comments and draft manuscript remain confidential to protect the integrity of the deliberative process. We thank the following individuals for their review of this report:

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Optimal real estate capital durability and localized climate change disaster risk

Cited by 36 publications

References 27 publications

Flood Risk Belief Heterogeneity and Coastal Home Price Dynamics: Going Under Water?

Flood Risk Belief Heterogeneity and Coastal Home Price Dynamics: Going Under Water?

Climate gentrification: from theory to empiricism in Miami-Dade County, Florida

Understanding the Long-Term Evolution of the Coupled Natural-Human Coastal System: The Future of the U.S. Gulf Coast

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