How Climate Gentrification is Increasing Real
Estate Costs and Socio-economic Disparities
Posted on
November 20, 2020
Justin
Cheng
Justin
Cheng
Senior
Associate, Insurance, Real Estate and Asset Management
Climate
gentrification is an emerging concept describing how land with greater
resiliency against intensifying physical impacts of climate change becomes more
desirable and valuable.[1] It catalyzes fast and visible socio-economic
transformation in communities.
The term
Climate Gentrification was originally coined in a 2018 Harvard University
research paper that studied the impacts of global climate change. As climate
change intensifies, investors seek out more climate-resilient real estate to
invest in, while affluent residents relocate to avoid physical impacts from
climate events such as rising sea-levels and storm surges.
When
low-income areas are climate resilient, this typically causes housing prices,
rent and property taxes to rise beyond affordable levels for existing residents
over time.[2] These residents are forced to endure higher costs for housing,
live in unsafe or inadequate living conditions or move away from their
neighbourhood.
Impacts of Climate Gentrification
Economic –
Elevated housing costs force individuals to choose between paying for food,
medical and other necessities; this is especially difficult on a fixed income
without corresponding wage increases. Those forced to move are often further
away from their employment and everyday services, increasing transportation
costs. Lower-income residents are less able to afford climate mitigation
equipment, rebuild after severe weather events or travel to escape impacts. As
physical climate risks continue to intensify, insurers may raise premiums
significantly while providing less coverage, or even cease underwriting in
risky regions altogether. Banks may also stop offering mortgages over 30 years
on at-risk sites,[3] making it very difficult to sell an affected property.
Social –
Increased financial burdens on those least able to afford it further
exacerbates social inequality in regions most affected by climate change.[4]
Existing communities will suffer as a result of long-time tenants being left
with no choices but to move out. It also points to a lack of government
investment[5] in marginalized areas for infrastructure and social services.
Poor communication between developers and government officials have neglected
the needs and desires of affected communities.[6]
Here are
three examples of Climate Gentrification occurring in the US:
Miami: The
city has experienced frequent flooding and more severe hurricane damage in
recent years, negatively affecting interest in high-value coastal properties.
This has caused land values in inland communities outside of the city at higher
elevations to rise significantly.[7]
Los
Angeles: In the past couple of years, severe wildfires north of the city have
rendered several neighbourhoods too risky for rebuilding (due to the risk of
more frequent and intense fires). With the Pacific Ocean to its west, sea level
rise is projected to force beachfront residents to retreat towards the centre
and east end of the city in the future, which is home to a number of
working-class communities. Many insurers are significantly raising premiums or
choosing not to underwrite any at-risk properties.[8]
Phoenix:
Long periods of extreme heat have pushed some to migrate to more temperate
locales, such as nearby Flagstaff, AZ. Its higher elevation results in lower
temperatures and proximity to Phoenix mean many have moved to or purchased
property in Flagstaff. It is reported that up to 25 percent of homes are
secondary dwellings, driving up the cost of housing for Flagstaff’s
residents.[9]
Real Estate Sector Review
In
Sustainalytics’ Risk Rating universe, 499 real estate companies were analysed
regarding their performance in “Sustainable Products & Services
Management”. The indicator examines developers’ response to climate
gentrification issues, providing an indirect approach through evaluating
product offerings from companies within the real estate sector from a
sustainability perspective. A higher score value signifies more effective
management of sustainable products and services at the company. Based on
average company performance, the real estate sector performs poorly as a whole,
as can be seen in the following chart. The average score of companies in each
subindustry falls significantly below “50” in this indicator (indicating
average management.) This reveals the underperformance of the subindustries,
inferring that real estate developers have notable room for improvement to
manage better the social impacts and housing accessibility challenges
associated with physical climate impacts in their business—especially when
compared to other real estate subindustries.
We
anticipate the negative impacts of climate gentrification to become more
widespread in the coming years. As such, developers will likely need to
consider impact assessments before starting each project. Insurance
affordability, population displacement, increasing regulatory requirements and
growing interest in sustainable building practices will shape the future of
this issue.
As physical
climate impacts become more frequent and affect more regions across the world,
climate gentrification highlights the plight of vulnerable communities who may
be least resilient to predictable climate events–having to choose between
everyday necessities or living in an area safe from climate risks. Through climate-conscious
policies and regulations, strengthened climate risk impact assessments,
equitable distribution of sustainable infrastructure investments and ongoing
community dialogue, social inequities caused by climate gentrification can be
reduced and managed.
Sources:
[1]
Dagenais, Travis. “Rising seas, distressed communities, and “climate
gentrification”: Jesse M. Keenan talks Miami in Vice, Scientific American”
Harvard University Graduate School of Design, August 14, 2017,
https://www.gsd.harvard.edu/2017/08/rising-seas-distressed-communities-and-climate-gentrification-jesse-m-keenan-talks-miami-in-vice-scientific-american/
[2]
Ivanova, Irina. “Climate gentrification threatens Miami’s last affordable
housing” CBS News, March 19, 2020, https://www.cbsnews.com/news/climate-change-miami-affordable-housing-gentrification-cbsn-originals-documentary/
[3] Raim,
Laura. “Florida’s flooded future”, Le Monde Diplomatique, June 2020,
https://mondediplo.com/2020/06/12florida
[4]
Florida, Richard. “‘Climate Gentrification’ Will Deepen Urban Inequality”,
Bloomberg CityLab, July 5, 2018,
https://www.bloomberg.com/news/articles/2018-07-05/-climate-gentrification-will-deepen-urban-inequality
[5] Suarez,
Xavier L. “We can reverse climate gentrification, keeping long-time residents
from being displaced | Opinion”, Miami Herald, November 19, 2019,
https://www.miamiherald.com/opinion/op-ed/article237521694.html
[6]
Caballero, Michael. “The case for preventing climate gentrification”, GreenBiz,
February 13, 2018, https://www.greenbiz.com/article/case-preventing-climate-gentrification
[7] Allen,
Greg. “South Florida Real Estate Boom Not Dampened By Sea Level Rise”, NPR,
December 5, 2017,
https://www.npr.org/2017/12/05/567264841/south-florida-real-estate-boom-not-dampened-by-sea-level-rise
[8] Holder,
Sarah. “Playing the Odds on the Next California Wildfire”, Bloomberg CityLab,
February 21, 2020,
https://www.bloomberg.com/news/articles/2020-02-21/can-ai-help-protect-homeowners-from-wildfire-risk
[9] Milman,
Oliver. “Climate gentrification: the rich can afford to move – what about the
poor?”, The Guardian, September 25, 2018,
https://www.theguardian.com/environment/2018/sep/25/climate-gentrification-phoenix-flagstaff-miami-rich-poor
Sem comentários:
Enviar um comentário