Sea Level Rise and Home Prices: Evidence from Long Island

RESEARCH PAPERS ARE PRELIMINARY MATERIALS CIRCULATED TO STIMULATE DISCUSSION AND CRITICAL COMMENT. THE VIEWS EXPRESSED ARE THOSE OF THE INDIVIDUAL AUTHORS. WHILE RESEARCH PAPERS BENEFIT FROM ACTIVE UHERO DISCUSSION, THEY HAVE NOT UNDERGONE FORMAL ACADEMIC PEER REVIEW.

Global sea level rise is a known consequence of climate change. As predictions of sea level rise have grown in magnitude and certainty, coastal real estate assets face an increasing climate risk. I use a complete data set of repeated home sales from Long Island in New York State to estimate the appreciation discount caused by the threat of sea level rise. The repeat sale methodology allows for unobserved property characteristics to be controlled for. Between 2000 and 2017, I find that residential properties that were exposed to future sea level rise experienced annual price appreciation that was 0.8 percentage points below unexposed properties. I provide numerous robustness checks to confirm this result. I also find evidence of demand spillovers by estimating an appreciation premium for properties that are near the coast but are relatively safe from sea level rise.

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