Does Climate Change Affect Real Estate Prices? Only if You Believe In It
By Constantine Yannelis, Lorenzo Garlappi and Markus Baldauf
In the wake of two powerful hurricanes in the U.S. this fall, the scientific evidence that climate change will raise the risk of severe weather events continues to grow.
In some coastal areas such as Hawaii and Florida, roughly one-tenth of all homes are expected to be underwater if sea levels rise by six feet. Zillow estimates that the value of homes at risk of being underwater is U.S. $882 billion.
However, not everyone in the general public seems to agree about the future effects of climate change: In a Gallup survey from last year, 42 percent of Americans agreed that global warming will pose a serious threat to their way of life, while a hefty 57 percent disagreed.
Our recent research suggests that beliefs about the effects of projected climate change may impact real estate prices decades before the projected damages are expected to occur.
The valuation of a real estate asset depends on many parameters. The asset's distance from the coast endows it with both scenic coastal views and inevitable exposure to coastal flooding.
Our study, published online on Sept. 11, explored how residential real estate prices are impacted by beliefs about climate change. Using a novel set of data, we were able to uncover a relationship between differences in beliefs about the occurrence and the effects of climate change—that is, the change in the long-term likelihood of adverse weather events—and the real estate valuation of the homes exposed to those risks.
We used a comprehensive data set on coastal home transaction prices in the U.S. that maps individual homes to future inundation projections, employing proprietary data from Zillow and scientific forecast data on sea levels from the National Oceanic and Atmospheric Administration. We matched this to survey data on U.S. population beliefs about climate change from the Yale Program on Climate Change.
We discovered that homes projected to be underwater sell for more in counties with more climate change deniers, relative to believers. In other words, houses projected to be underwater in "believer" neighborhoods tend to sell at a discount compared to houses in "denier" neighborhoods. One standard deviation increase in the fraction of believers leads to a 7 percent difference in the price of a home projected to be underwater.
In U.S. counties where respondents have a higher belief in climate change, flooding risk appears to have a greater impact on what people will pay for a given property. Risk is measured as the degree of sea level rise by the year 2100.
With data like this, it's important to figure out whether the results could have been influenced by other factors. What if beliefs about climate change are not correlated with other determinants of housing prices? For that reason, we controlled for a variety of house characteristics, including age, distance from the coast, lot size, number of bedrooms and parking, as well as regional characteristics such as average income, elevation and short-term flood risk.
Controlling for the distance from the coast is particularly important. All else being equal, most people prefer to live near the beach and will pay a premium to do so. That means houses more vulnerable to coastal flooding are more likely to have higher valuations due to their proximity to the coast. That can suggest a spurious relationship between homes being projected to be underwater and sales prices. But our analysis indicates there is a clear correlation.
Our study shows that disagreement about the occurrence and consequences of projected natural disasters may give rise to a valuation gap in U.S. real estate, decades before these disasters occur. This finding does not speak to whether climate change deniers or believers are wrong. But they cannot both be right. Whether their disagreement reflects expectations about climate risk or mitigation policies—such as coastal walls to prevent flooding—remains an open question.
Reposted with permission from our media associate The Conversation.
This week marks the official start of fall, but longer nights and colder days can make it harder to spend time outdoors. Luckily, there are several inspiring environmental films that can be streamed at home.
1. Kiss the Ground<span style="display:block;position:relative;padding-top:56.25%;" class="rm-shortcode" data-rm-shortcode-id="ccc5f0c92a5603e68aec39e56b0db02a"><iframe lazy-loadable="true" src="https://www.youtube.com/embed/K3-V1j-zMZw?rel=0" width="100%" height="auto" frameborder="0" scrolling="no" style="position:absolute;top:0;left:0;width:100%;height:100%;"></iframe></span><p><strong>Streaming On: Netflix</strong></p><p><strong>Premiere Date: Sept. 22</strong></p><p>Between <a href="https://www.ecowatch.com/wildfires-california-washington-oregon-photos-2647585008.html" target="_self">wildfires devastating the U.S. West Coast</a> and <a href="https://www.ecowatch.com/tropical-storm-beta-landfall-2647760268.html" target="_self">storms battering the Gulf</a>, the impacts of the <a href="https://www.ecowatch.com/climate-change/" target="_self">climate crisis</a> can feel overwhelming right now. <em><a href="https://kissthegroundmovie.com/" rel="noopener noreferrer" target="_blank">Kiss the Ground</a> </em>offers an alternative to all of the bad news by focusing on solutions.</p><p>The film, directed by Josh and Rebecca Tickell and narrated by Woody Harrelson, explains how we can heal the Earth through "regenerative agriculture," farming practices that draw carbon dioxide from the atmosphere and into soil as a way to restore soil health, which in turn boosts ecosystems and food supplies.</p><p>"<em>Kiss the Ground </em>shows how feasible it is to make these changes at a grassroots level immediately and make a truly substantive impact with low cost and easy to implement solutions," Executive Producer RJ Jain said in an email. "This is why I got involved."</p>
2. Public Trust: The Fight for America's Public Lands<span style="display:block;position:relative;padding-top:56.25%;" class="rm-shortcode" data-rm-shortcode-id="5338f7a2931e356910026e5fd76fac56"><iframe lazy-loadable="true" src="https://www.youtube.com/embed/jsKMTAaj_wQ?rel=0" width="100%" height="auto" frameborder="0" scrolling="no" style="position:absolute;top:0;left:0;width:100%;height:100%;"></iframe></span><p><strong>Streaming On: YouTube</strong></p><p><strong>Premiere Date: Sept. 25, 2 p.m. EDT </strong></p><p>This <a href="https://www.patagonia.com/films/public-trust/" target="_blank">award-winning documentary</a> tells the stories of Indigenous activists, journalists, whistleblowers and historians working to protect America's <a href="https://www.ecowatch.com/tag/public-lands" target="_self">public lands</a>. The film focuses on three political struggles: the shrinking of <a href="https://www.ecowatch.com/tag/bears-ears" target="_self">Bears Ears</a> National Monument in Utah, the mining of Boundary Waters Wilderness in Minnesota and the opening of the <a href="https://www.ecowatch.com/tag/Arctic-National-Wildlife-Refuge" target="_self">Arctic National Wildlife Refuge</a> to fossil fuel exploration.</p><p><em>Public Trust</em> was directed by David Garrett Byars and produced by Jeremy Rubingh. Patagonia Films, Patagonia founder Yvon Chouinard and actor Robert Redford are executive producers. It will be <a href="https://www.youtube.com/watch?v=OGjnIG7puzY" rel="noopener noreferrer" target="_blank">released</a> on YouTube in time for <a href="https://www.ecowatch.com/national-public-lands-day-2640656776.html" target="_self">National Public Lands Day</a>.</p><p>"Our country is fortunate to have millions of acres of public lands, including National Parks, Monuments, Wildlife Refuges and Wilderness set aside for future generations," Redford said. "Sadly, these lands that belong to you and me are under unprecedented threats from the greed of big corporations, eager to weaken restrictions in the pursuit of profits. Many of our current politicians are also to blame. <em>Public Trust</em> tells the story of citizens who are fighting back. It's a much-needed wake-up call for all of us who want to preserve our unique and wild cultural heritage."</p>
3. David Attenborough: A Life on Our Planet<span style="display:block;position:relative;padding-top:56.25%;" class="rm-shortcode" data-rm-shortcode-id="156438a30836a765d7a92982545fc334"><iframe lazy-loadable="true" src="https://www.youtube.com/embed/B_OFZvAd05Y?rel=0" width="100%" height="auto" frameborder="0" scrolling="no" style="position:absolute;top:0;left:0;width:100%;height:100%;"></iframe></span><p><strong>Streaming On: Netflix</strong></p><p><strong>Premiere Date: Oct. 4</strong></p><p>Beloved nature broadcaster <a href="https://www.ecowatch.com/tag/David-Attenborough" target="_self">David Attenborough</a> has spent his career introducing viewers to the wonders of our planet. In recent years, his footage of albatrosses swallowing <a href="https://www.ecowatch.com/tag/plastics" target="_self">plastic</a> in <em>Blue Planet II</em> has been credited with <a href="https://www.ecowatch.com/2018-fighting-plastic-waste-2624606566.html" target="_self">helping to ramp up</a> the global fight against plastic pollution. Now, in this <a href="https://www.wwf.org.uk/" rel="noopener noreferrer" target="_blank">World Wildlife Fund</a> (WWF)-produced <a href="https://www.attenborough.film/" rel="noopener noreferrer" target="_blank">documentary</a>, he reflects on the defining moments of his career and the devastating changes he has witnessed.</p><p><em>David Attenborough: A Life on Our Planet,</em> which was also produced by Silverback Films and directed by Alastair Fothergill, Jonnie Hughes and Keith Scholey, features an intimate conversation between Attenborough and Sir Michael Palin as the broadcaster reflects on his life and a career that took him to every continent on Earth. In addition to streaming on Netflix, the movie will be available in select theaters starting Sept. 28.</p><p>"For decades, David has brought the natural world to the homes of audiences worldwide, but there has never been a more significant moment for him to share his own story and reflections," WWF executive producer Colin Butfield said in a <a href="https://www.wwf.org.uk/updates/david-attenborough-life-our-planet" target="_blank">statement</a>. "This film coincides with a monumental year for environmental action as world leaders make critical decisions on nature and climate. It sends a powerful message from the most inspiring and celebrated naturalist of our time."</p>
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If all the glaciers and ice caps on the planet melted, global sea level would rise by about 230 feet. That amount of water would flood nearly every coastal city around the world [source: U.S. Geological Survey]. Rising temperatures, melting arctic ice, drought, desertification and other catastrophic effects of climate change are not examples of future troubles — they are reality today. Climate change isn't just about the environment; its effects touch every part of our lives, from the stability of our governments and economies to our health and where we live.
<p>Why environmental refugees flee their homes is a complicated mixture of environmental degradation and desperate socioeconomic conditions. People leave their homes when their livelihoods and safety are jeopardized. What effects of climate change put them in jeopardy? Climate change triggers, among other problems, desertification and drought, <a href="https://science.howstuffworks.com/environmental/green-science/deforestation.htm" target="_blank">deforestation</a>, land degradation, rising sea levels, <a href="https://science.howstuffworks.com/nature/natural-disasters/flood.htm" target="_blank">floods</a>, more frequent and more extreme storms, <a href="https://science.howstuffworks.com/nature/natural-disasters/earthquake.htm" target="_blank">earthquakes</a>, <a href="https://science.howstuffworks.com/nature/natural-disasters/volcano.htm" target="_blank">volcanoes</a>, food insecurity and famine.</p><p>The September <a href="http://visionofhumanity.org/app/uploads/2020/09/ETR_2020_web-1.pdf" target="_blank">2020 Ecological Threat Register Report</a>, by the Institute for Economics & Peace, predicts the hardest hit populations will be:</p><ul><li>Sub-Saharan Africa, South Asia, the Middle East and North Africa</li><li>Afghanistan, Syria, Iraq, Chad, India and Pakistan (which are among the world's least peaceful countries)</li><li>Pakistan, Ethiopia and Iran are most at risk for mass displacements</li><li>Haiti faces the highest risk of all countries in Central America and the Caribbean</li><li>India and China will be among countries experiencing high or extreme water stress</li></ul>
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