Economic incentives for coastal homeowner adaptation to climate change

ABSTRACT

Communities are already grappling with climate change’s acute effects, evidenced by the growing frequency and intensity of extreme events worldwide. Strategies to encourage adaptation to climate change are urgently needed, particularly to preempt common ineffective and maladaptive responses. The United States provides a notable case study for testing the potential for economic incentives to drive voluntary adaptation in vulnerable coastal communities where mandates through building codes have proven insufficient to limit economic losses. This paper analyzes a novel survey of 662 coastal households in the hurricane-exposed state of North Carolina. Our findings suggest that homeowners who believe adaptation measures increase the market value of their homes are more likely to have homes with these upgrades. Furthermore, they are more likely to have taken actions to upgrade their homes after purchase and to express stronger intentions to invest in future upgrades. While perceived affordability plays a role in their upgrading actions, it seems unrelated to future intentions. Uptake, or intended uptake, of climate adaptation measures by coastal homeowners is not driven by the perceived efficacy in preventing future losses, challenging a tactic commonly used in policy messaging. Instead, reducing climate-related hurricane losses requires a greater valuation of climate adaptation measures in real estate markets. The need to elevate market value over efficacy in governmental and non-governmental efforts to promote adaptation may be relevant to adaptation for other types of extreme events or in other locations globally where real estate is a prized investment with the potential for significant returns.

Key policy insights

• The conventional policy-driven messaging of adaptation efficacy – avoided losses as the reason to adapt – is not successfully driving homeowner actions.

• Reducing climate-intensified hurricane losses requires more certain benefits to homeowners; greater valuation of adaptation measures in real estate markets can provide such benefits.

• Perceived affordability is not the primary barrier to action, though policies should continue to encourage the development of cost-effective adaptation strategies.

• Mandatory disclosure during home sales and greater emphasis on adaptation measures in real estate listings can bolster discourse and valuation of measures to reduce vulnerability to climate-intensified extreme events.

KEYWORDS:

• Hurricanes
• real estate
• risk mitigation
• climate adaptation
• economic incentives
• coastal hazards

Acknowledgements

The authors gratefully acknowledge the Global Adaptation Index (ND-GAIN) for piloting the Coastal Homeowner Survey in New Hanover County, North Carolina, implemented with their partnering survey research firm, SSRS. The authors also recognize the ongoing collaboration with the Insurance Institute for Business and Home Safety (IBHS). The second author recognizes the support of the Andrew W. Mellon New Directions Fellowship for training in ecology and environmental law and the Notre Dame Institute for Advanced Study (NDIAS) for providing the time, space, and engaged community essential to writing. Finally, the authors thank Talbot Andrews, Alicia Cooperman, Sara Constantino, the anonymous reviewers, and the editorial team at Climate Policy for their helpful comments.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Data availability statement

Some of the data used for this study are confidential and may only be provided with restrictions. Specifically, respondents’ names, addresses, and home coordinates (latitude, longitude) are confidential. They cannot be shared under the human subjects research protocol approved by the University of Notre Dame Institutional Review Board (Protocol 17-03-3701). However, coastal homeowners’ uptake all other de-identified data, models, or codes generated or used during the study will be made available from the corresponding author upon reasonable request.

Notes

1 Tropical cyclones may also be called hurricanes or typhoons, depending on the basin in which the storm originates. For example, tropical cyclones impacting the US Gulf and Atlantic coasts originate in the North Atlantic and are termed hurricanes.

2 The achieved sample was weighted to correct for minor differences between the sample and population in age, gender, race, education, marital status, employment status, and FEMA SFHA.

3 This finding does not diminish the need for continued development of cost-effective adaptation strategies, particularly for low-income households who often occupy the most vulnerable homes.

4 Zillow is one of the leading real estate websites in the United States, offering detailed information on more than 200 million homes. https://www.zillow.com/.

Additional information

Funding

The authors gratefully acknowledge the financial support of Notre Dame’s Environmental Change Initiative (ECI).

Notes on contributors

Tracy Kijewski-Correa

Tracy Kijewski-Correa is the William J. Pulte Director of the Pulte Institute for Global Development in the University of Notre Dame's Keough School of Global Affairs, where she also serves as the Academic Director of the School's Integration Lab (i-Lab). As a professor of Civil Engineering and Global Affairs, her research seeks to enhance the resilience and sustainability of hazard-exposed communities, with an emphasis on holistic responses to infrastructure vulnerabilities and tools that support science-informed decision making. She currently serves as the inaugural director of the Structural Extreme Event Reconnaissance (StEER) network mobilizing networks of engineers to assess disaster impacts globally.

Debra Javeline

Debra Javeline is an associate professor in the Department of Political Science, an affiliated faculty member of the Environmental Change Initiative, and a fellow of the Kroc Institute for International Peace Studies, Kellogg Institute for International Studies, and Nanovic Institute for European Studies at the University of Notre Dame. Her research has been published in Climatic Change, American Political Science Review, Comparative Political Studies, Perspectives on Politics, Political Research Quarterly, Public Opinion Quarterly, Natural Hazards Review, Bioscience, and other journals. She is the author of After Violence: Russia's Beslan School Massacre and the Peace That Followed (2023).

William Kakenmaster

William Kakenmaster is a PhD student at the University of Notre Dame and PhD Fellow at the Kellogg Institute for International Studies. His research interests include political economy approaches to climate policy, comparative political institutions, and political methodology.

Angela Chesler

Angela Chesler is a research fellow in the Belfer Center for Science and International Affairs at Harvard University and a PhD candidate in political science and peace studies at the University of Notre Dame, where she is also an affiliate of the Kellogg Institute for International Studies and the Klau Center for Civil and Human Rights. She conducts research on political violence, conflict, and environmental politics. Her work has been published in Climatic Change and Natural Hazards Review, among other publications.