Out of Paradise: Residential Asset Bubbles & the Local Politics of Climatic Risk

• In Event: Land Use Policies, Local Boundaries, and Neighborhood Inequalities

Abstract

The ongoing transformation of earth systems due to anthropogenic climate change is remaking local politics in new and often unexpected ways. While an increasing number of papers recognize the political nature of climate change adaptation and stress a multi-level analysis of the interests, institutions, and strategies driving outcomes, few have offered general propositions. In this paper, I begin to address this gap by developing a theory of residential climate adaptation politics in the United States. Increasing hazards to residential property, I argue, create a new distributional politics of risk with four primary distinct players: developers, homeowners, insurers, and the state. Developers seek to maximize profit by inflating the present future value of properties subject to damage threats, often intervening in politics or market signals to do so. Homeowners seek to maximize home value and minimize both insurance premiums and risk exposure, often lobbying local government officials to build defenses or subsidize insurance on their behalf. Insurers seek to minimize their own liabilities under conditions of proliferating risk. The state faces myriad competing imperatives, including protecting constituent property, ensuring public safety, promoting economic development, and (when needed) providing emergency bailouts. These actors each conflict and cooperate in different ways across a heterogeneous landscape of institutional parameters, risk distributions, and political behavior which is frequently fraught with moral hazards and rent-seeking.

Author

• Johnathan James Guy, University of California, Berkeley