Citation

Bunten D, Kahn ME. J Hous Econ 2017; 36: 1-7.

Copyright

(Copyright © 2017)

DOI

10.1016/j.jhe.2017.01.004

PMID

34483635

Abstract

The durability of the real estate capital stock could hinder climate change adaptation because past construction anchors the population in beautiful and productive but increasingly-risky coastal areas. However, coastal developers anticipate that their assets face increasing risk and this creates an incentive to seek adaptation strategies. This paper models climate change as a joint process of (1) increasingly destructive storms and (2) a risk of sea-level rise that submerges coastal property. We study how forward-looking developers and real estate investors respond to the new risks along a number of dimensions including their choices of location, capital durability, capital mobility (modular real estate), and maintenance of existing properties. The net effect of such investments is a more resilient urban population.

Language: en

Keywords

Risk; Climate change; Capital durability; Q54; R39