TY - JOUR
T1 - Disaster on the horizon
T2 - The price effect of sea level rise
AU - Bernstein, Asaf
AU - Gustafson, Matthew T.
AU - Lewis, Ryan
N1 - Funding Information:
☆ We are extremely grateful toward the folks at Zillow and NOAA for providing critical data. Data provided by Zillow through the Transaction and Assessment Dataset (ZTRAX). More information on accessing the data can be found at http://www.zillow.com/ztrax. The results and opinions are those of the author(s) and do not reflect the position of Zillow Group. We would also like to thank the International Center for Pension Management and the Global Association of Risk Professionals for their generous awards. Thanks to our referee for providing invaluable guidance and feedback during the publication process. Thanks to Pontificia Universidad Católica de Chile, CU-Boulder Consumer Financial Decision Making Lab Group, CU Environmental Economics Brown Bag, Penn State's Real Estate Brown Bag, participants at the 2018 Texas Finance Festival, in particular our discussant Shimon Kogan, Richard Thakor, Diego Garcia, Ed Van Wesep, Brent Ambrose, Shimon Kogan, Cloe Garnache, William Mullins, Paul Goldsmith-Pinkham, Randy Cohen, Tony Cookson, Brian Waters, John Griffin, Peter Iliev, Katie Moon, Robert Dam, Stephen Billings, Jaime Zender, David Gross, John Lynch, Nick Reinholtz, Shaun Davies, Brendan Daley, Ralph Koijen, Francisco Gomes, Nils Wernerfelt and Xingtan Zhang for the valuable feedback. We also appreciate discussions with participants at the 2018 Western Finance Association and 2018 European Finance Association meetings, especially those with our discussants Justin Murfin and Constantine Yannelis. All errors are our own.
Publisher Copyright:
© 2019
PY - 2019/11
Y1 - 2019/11
N2 - Homes exposed to sea level rise (SLR) sell for approximately 7% less than observably equivalent unexposed properties equidistant from the beach. This discount has grown over time and is driven by sophisticated buyers and communities worried about global warming. Consistent with causal identification of long-horizon SLR costs, we find no relation between SLR exposure and rental rates and a 4% discount among properties not projected to be flooded for almost a century. Our findings contribute to the literature on the pricing of long-run risky cash flows and provide insights for optimal climate change policy.
AB - Homes exposed to sea level rise (SLR) sell for approximately 7% less than observably equivalent unexposed properties equidistant from the beach. This discount has grown over time and is driven by sophisticated buyers and communities worried about global warming. Consistent with causal identification of long-horizon SLR costs, we find no relation between SLR exposure and rental rates and a 4% discount among properties not projected to be flooded for almost a century. Our findings contribute to the literature on the pricing of long-run risky cash flows and provide insights for optimal climate change policy.
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U2 - 10.1016/j.jfineco.2019.03.013
DO - 10.1016/j.jfineco.2019.03.013
M3 - Article
AN - SCOPUS:85063761822
SN - 0304-405X
VL - 134
SP - 253
EP - 272
JO - Journal of Financial Economics
JF - Journal of Financial Economics
IS - 2
ER -
