[mikrl]

How do you feel about the denialist argument that since people still buy expensive waterfront property, climate change is not a big deal?

My interpretations would probably be some combination of

- information asymmetry leading to demand distorting upward

- the people who are buying the property have priced in the loss relative to their utility and will be relatively unaffected should they be left holding the watery bag

[alwa]

There’s some degree of risk-shifting, too, right? Since insurance is a precondition for a mortgage and therefore for homeownership (the way Americans like to do it, anyway), states are wont to arrange an “insurer of last resort” that supports the excessive risk through industrywide levies and is ultimately backed by the public purse. So in effect a chunk of that risk is being socialized.

For that matter while some people are rich and flinging money at “expensive waterfront homes,” it seems like most of the people who are being nonrenewed here would have made their decisions before the risk environment shifted in these ways that their insurers are now moving to price in.

Forcing people out of their homes is always going to be painful and ugly; and it’s always going to be politically popular to “keep insurance rates down,” further blunting the raw, market-based risk signal in ways both blunt and subtle.

From a market-level view, that looks impure and improper. From a human, family-level point of view, it’s hard not to sympathize with people who feel like they did everything right, only to have their biggest asset, the totem of generational security that they worked their entire lives for, suddenly turn toxic.

Just as this Times article demonstrates, a lot of these folks don’t have a whole lot of attractive alternatives available to them by the time they’re in this situation. And this market, more than most, seems to come down to deeply human stories, and to images of sympathetic families paying the price for developers’ profligacy.

[mike_hearn]

Why so uncharitable? You could at least consider the possibility that their understanding of the situation is better than yours.

There are supposedly two climate-related threats from living on the coast: sea level rise and storm risk. Sea level rise is so trivial that many Pacific islands have been getting bigger, not smaller as was predicted, and it's a very steady rate of change. That leaves storm risk. NOAA is a group of people with a long history of scientific scandals who owe much of their funding to their claims about climate risk, but let's see what they say about living on the coast:

https://www.gfdl.noaa.gov/global-warming-and-hurricanes/

> "it is premature to conclude with high confidence that human-caused increases in greenhouse gases have caused a change in past Atlantic basin hurricane activity that is outside the range of natural variability"

Mankind has been emitting CO2 for 150+ years but there's no data showing it's made the weather worse.

So, all claims that living on the coast is a bad idea are based 100% on modelling predictions. Given they've been diverging over time and divergence has got worse instead of better, the opposite of what should be happening, reasonable people can certainly conclude it's OK to ignore them when considering property prices.

[iambateman]

Eh, people (including me) are very good at optimizing for short-run happiness and less-good at optimizing for longer-run happiness.

A million people a year get arrested in the US for drunk driving...and that's apparently the equilibrium. If that many people are willing to risk their lives and their freedom to save money on an Uber, it's not hard to believe that millions of people would be happy to buy beautiful waterfront property.

The risks are known but not totally apparent.

[alwa]

There’s also this notion of normalcy bias: even if I accept the risk in the abstract, I genuinely believe it won’t happen to me personally.

https://en.m.wikipedia.org/wiki/Normalcy_bias

[pavlov]

The German stock market produced excellent gains in 1933-41. When the Nazi government closed the stock exchange after Stalingrad, the index was near its all-time high. (When the market finally reopened in 1948, German companies were valued some 80% lower.)

Even in large aggregates, investment decisions are ultimately made by people with their own biases. Markets are not infallible predictors of anything.