Flood Risk Belief Heterogeneity and Coastal Home Price Dynamics

Flood Risk Belief Heterogeneity and Coastal Home Price Dynamics

Author: Laura A. Bakkensen

Publisher:

Published: 2017

Total Pages: 53

ISBN-13:

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How will climate risk beliefs affect coastal housing market dynamics? This paper provides both theoretical and empirical evidence: First, we build a dynamic housing market model with heterogeneity in home types, consumer preferences, and flood risk beliefs. The model incorporates a Bayesian learning mechanism allowing agents to update their beliefs depending on whether flood events occur. Second, to quantify these elements, we implement a door-to-door survey campaign in Rhode Island. The results confirm significant heterogeneity in flood risk beliefs, and that selection into coastal homes is driven by both lower risk perceptions and higher coastal amenity values. Third, we calibrate the model to simulate coastal home price trajectories given a future flood risk increase and policy reform across different belief scenarios. Accounting for heterogeneity increases the projected home price declines due to sea level rise by a factor of four, and increases market volatility by an order of magnitude. Studies assuming homogeneous rational expectations may thus substantially underestimate the home price implications of future climate risks. We conclude by highlighting potential implications for welfare and flood policy.


7 Sea Level Rise Real Estate Questions

7 Sea Level Rise Real Estate Questions

Author: Lawrence S Richardson Jr

Publisher:

Published: 2019-12-15

Total Pages: 102

ISBN-13: 9781675209202

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Sea level rise flooding is already impacting communities on the Atlantic, Pacific and Gulf of Mexico coastlines. Everyone involved in a real estate transaction in coastal areas needs to know the sea level rise flooding status of a property BEFORE they act. "7 Sea Level Rise Real Estate Questions" was written to help buyers, sellers, owners, and real estate agents to protect themselves, their property, and their financial future from the inundation that climate scientists say is going to get much worse in the years to come."7 Sea Level Rise Real Estate Questions" gives readers concise information on what's driving global warming and sea level rise, why the warming of the atmosphere and oceans due to the burning of fossil fuels is speeding up the melting of snow and ice in Greenland and the polar regions, and how it's affecting real estate along the coasts, and in some cases, far inland. Once the environmental facts are established and readers understand that sea level rise is not only going to remain a threat for their lifetime but worsen in the decades to come, the book goes on to explain the many challenges buyers, sellers, owners and real estate agents face when engaged in real estate transactions in coastal areas.After readers are given a list of ten valuable information resources, from sellers and local real estate agents, to home inspectors and sea level rise mapping websites, the book explains the challenges facing buyers, sellers, owners and real estate agents and what they can do about them. Specifically, the "7 Sea Level Rise Real Estate Questions" helps readers to decide what to do if the property of interest already experiences flooding or is at risk of flooding in the near future. It also discusses the importance of related issues, such as how the local government is responding to the challenge, how the flood insurance and mortgage industries are faring, and how to analyze how much risk and expense they can honestly handle when confronted with the threat of sea level rise flooding.An experienced real estate agent and journalist, Larry Richardson lives at the front lines of the battle against sea level rise flooding in South Florida. He wrote "7 Sea Level Rise Real Estate Questions" when he noticed that buyers were purchasing properties they didn't know were in active flood zones. When he conducted research for this book, he found that in most states, it's very difficult for buyers, sellers, owners, and real estate agents to gather the information they need on sea level rise flooding to make informed decisions on how to respond to the challenge. This book should help them to wrap their heads around this complex issue BEFORE they get involved in a real estate transaction.


Sea Level Rise and House Price Capitalisation

Sea Level Rise and House Price Capitalisation

Author: Franz Fuerst

Publisher:

Published: 2019

Total Pages: 0

ISBN-13:

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Economic theory and extant research suggest that flood prone properties should attract a discount. This concept can be extended to properties affected by future sea level rise but there is limited information for purchasers to judge and make informed decisions about their investment. Using a comprehensive dataset comprising statutory rating valuation information and sales transactions for the period 2011 - 2016, a hedonic framework is applied in order to ascertain the implications of the existing flood discount and potential price effects of future sea level rise. The hedonic model identifies a price discount effect for properties affected by known flooded areas, whilst sea level rise has no notable effect on valuations or sales data. The results highlight that purchasers do not appear to price sea level rise risk and are under-prepared for the future challenges and implications sea level rise and the ancillary effects of future flooding, inundation and storm surge.


Impact of Flood Risk on House Prices

Impact of Flood Risk on House Prices

Author: Nam Bui

Publisher:

Published: 2019

Total Pages: 232

ISBN-13:

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Rising sea levels are threatening populations that live in shoreline cities. The southern section of Ho Chi Minh City (HCMC), Vietnam is a newly established urban area in which lively real estate transactions are taking place. However, certain sections of the area are frequently put under the threat of inundation. Spatial econometric models were applied to analyse residential property asking prices, as advertised, within the southern region of HCMC to examine the effect of flood risk on residential property asking prices. Asking prices for flood-prone properties were supposed to be discounted compared to the non-flooded ones. Causes of price reduction that were studied are flood risk awareness, the impact of a large flood event, and constant exposure to floods. This research contributes to the existing literature as follows. First, the effect of pluvial flood risk is found similar to that of large and irregular floods, which have been the focus of earlier studies. Second, the inclusion of legal status as a control variable accounts for the characteristic of the Vietnamese housing market. Third, several cultural differences between the Vietnamese and Westerners' way of purchasing properties are examined.


Who Cares?

Who Cares?

Author: Olga Filippova

Publisher:

Published: 2019

Total Pages:

ISBN-13:

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Globally, the single-most observable, predictable, and certain impact of climate change is sea level rise. Using a case study from the Kapiti Coast District in New Zealand, we pose a simple question: Do people factor in the warnings provided by scientists and governments about the risk of sea-level rise when making their investment decisions? We examine the single most important financial decision that most people make - purchasing a home, to see whether prices of coastal property change when more/less information becomes available about property-specific consequences of future sea level rise. The Kapiti Coast District Council published detailed projected erosion risk maps for the district's coastline in 2012 and was forced to remove them by the courts in 2014. About 1,800 properties were affected. We estimate the impact of this information on home prices using data from all real estate transactions in the district with a difference-in-differences framework embedded in a hedonic pricing model. We find that the posting of this information had a very small and statistically insignificant impact on house prices, suggesting people do not care much about the long-term risks of sea-level rise as they do not incorporate these risks in their investment decisions.


Climate Adaptation and Flood Risk in Coastal Cities

Climate Adaptation and Flood Risk in Coastal Cities

Author: Jeroen Aerts

Publisher: Routledge

Published: 2013-12-04

Total Pages: 359

ISBN-13: 1136528938

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This book presents climate adaptation and flood risk problems and solutions in coastal cities including an independent investigation of adaptation paths and problems in Rotterdam, New York and Jakarta. The comparison draws out lessons that each city can learn from the others. While the main focus is on coastal flooding, cities are also affected by climate change in other ways, including impacts that occur away from the coast. The New York City Water Supply System, for example, stretches as far as 120 miles upstate, and the New York City Department of Environmental Protection has undertaken extensive climate assessment not only for its coastal facilities, but also for its upstate facilities, which will be affected by rising temperatures, droughts, inland flooding and water quality changes. The authors examine key questions, such as: Are current city plans climate proof or do we need to finetune our ongoing investments? Can we develop a flood proof subway system? Can we develop new infrastructure in such a way that it serves flood protection, housing and natural values?


Managing Climate Risk in the U.S. Financial System

Managing Climate Risk in the U.S. Financial System

Author: Leonardo Martinez-Diaz

Publisher: U.S. Commodity Futures Trading Commission

Published: 2020-09-09

Total Pages: 196

ISBN-13: 057874841X

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This publication serves as a roadmap for exploring and managing climate risk in the U.S. financial system. It is the first major climate publication by a U.S. financial regulator. The central message is that U.S. financial regulators must recognize that climate change poses serious emerging risks to the U.S. financial system, and they should move urgently and decisively to measure, understand, and address these risks. Achieving this goal calls for strengthening regulators’ capabilities, expertise, and data and tools to better monitor, analyze, and quantify climate risks. It calls for working closely with the private sector to ensure that financial institutions and market participants do the same. And it calls for policy and regulatory choices that are flexible, open-ended, and adaptable to new information about climate change and its risks, based on close and iterative dialogue with the private sector. At the same time, the financial community should not simply be reactive—it should provide solutions. Regulators should recognize that the financial system can itself be a catalyst for investments that accelerate economic resilience and the transition to a net-zero emissions economy. Financial innovations, in the form of new financial products, services, and technologies, can help the U.S. economy better manage climate risk and help channel more capital into technologies essential for the transition. https://doi.org/10.5281/zenodo.5247742