Disaster on the horizon: The price effect of sea level rise

By Asaf Bernstein, Matthew T. Gustafson, Ryan Lewis. Journal of Financial Economics, 2019

663 citations recorded by the source corpus.

Abstract 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.

Subfields: Accounting, Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/14df1146ba76f76c5dd7114ca75a283cf3258e44

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Citations in the corpus

Digital Sustainability and Entrepreneurship: How Digital Innovations Are Helping Tackle Climate Change and Sustainable Development (2020, background): “To take another case, computer models have made great headway mapping the likely impact of rising sea levels on coastal real estate (Bernstein et al., 2019), but have struggled to quantify the impacts of still poorly understood climate feedbacks and nonlinear changes to major earth systems (Bonan & ”
Climate Change News Risk and Corporate Bond Returns (2020, neutral): “In addition, climate risk also affects the prices of municipal bonds (Goldsmith-Pinkham, Gustafson, Lewis, and Schwert (2020) and Painter (2020)) and house prices (Giglio, Maggiori, Rao, Stroebel, and Weber (2018), Bernstein, Gustafson, and Lewis (2019), and Baldauf, Garlappi, and Yannelis (2020)).”
Investor Rewards to Climate Responsibility: Stock-Price Responses to the Opposite Shocks of the 2016 and 2020 U.S. Elections (2021, neutral): “…Andersson, Bolton, and Samama (2016), Baldauf, Garlappi, and Yannelis (2020), Bartram, Hou, and Kim (2019), Berkman, Jona, and Soderstrom (2019), Bernstein, Gustafson, and Lewis (2019), Bolton and Kacperczyk (2020a,b), Ceccarelli, Ramelli, and Wagner (2021), Choi, Gao, and Jiang (2020), Engle…”
The impact of climate change on the cost of bank loans (2020, neutral): “In the real estate market, Bernstein et al. (2019) find that sea level rise reduces the value of”
Climate Change and Corporate Cash Holdings: Global Evidence (2020, neutral): “Similarly, Bernstein et al. (2019) find that sea level rise reduces the value of exposed homes”