Lenders With the Best Climate Data Will Be in a Position to Discriminate
As banks and other institutions get more detailed models, people who are most affected by climate change will face difficulties in getting financing.
We now live in a world where climate gentrification exists: People and institutions are starting to assess and appraise properties based on their susceptibility to climate impacts. The idea was largely hypothetical as recently as 2016, but over the past two years a decent body of work has emerged, much of it from U.S. academics, showing that both mortgage lenders and property buyers are pricing in some forms of climate risk.
It’s tempting to assume that more information about the impacts of climate change leads to greater efforts to quickly cut emissions and build resilience. But the evidence of climate gentrification points in a different direction: Regions and people most affected by climate change will face higher barriers to get financing and investment. The money will simply leave.