Climate Change and the Spatial Distribution of Socioeconomic Vulnerability in Flood-Prone Coastal Regions

Abstract

Who is most vulnerable to climate change along the coast? Since the 1950s, there has been a dramatic increase in the frequency of floods in the U.S., increasing from a national average of five flood days between 1950-1959 to fifteen flood days between 2011 and 2020 (U.S. Environmental Protection Agency, 2021). Existing federal insurance and post-disaster assistance programs are largely structured around the protection and recovery of properties along the coast, which excludes non-homeowners (renters) from climate change related assistance and climate resilient policy making.

Assuming climate risk exposure varies by homeownership status, I estimate the effect of flood risk on homeownership status as a proxy for vulnerability. By estimating the effect of flood risk on median property values and monthly rent prices, I find that homeowners and tenants discount flood risk differently. I reconcile the observed difference in price effects with homeownership rates along the coast to examine how individuals may vary in their ability (instead of willingness) to pay for safety. This paper contributes to the growing literature on climate change risk, market responses, and impact on residential welfare along the U.S. coast by proposing a causal framework to reconcile perceived risk (price effects) and preferred risk (sorting choice).