The Politics of Coastal Homes
The video went viral: In early May 2022, a beachfront home on North Carolina’s Outer Banks collapsed into the ocean during a coastal storm. Stilts splintering like toothpicks, the house slid slow-motion into the waves and bobbed there like a giant cork.
With global sea levels continuing to rise at an increasing rate because of climate change — an eighth of an inch every year, according to the National Oceanic and Atmospheric Administration (NOAA) — these types of scenarios are likely to become more common. What does this mean in terms of who is choosing to buy and own coastal homes? And what does it have to do with politics?
Climate change has become a partisan issue, ranking highest on a 2020 Pew Survey list that included immigration, gun policy, health care, terrorism, and race relations. According to a 2016 Pew Survey, there is significant partisan disagreement on the future consequences of sea level rise, with 67 percent of Democrats believing it is very likely climate change would cause sea level rise to erode shorelines, relative to only 16 percent of Republicans.
Matthew Gustafson, Penn State Smeal College of Business associate professor of finance and Stuart and Michele Rothstein Early Career Professor, along with co-researchers at the University of Colorado, sought to find out whether differences in views on climate change among Democrats and Republicans have an effect on residential decisions in coastal communities. “The gap in views regarding long-run climate risks between the two political parties has received a lot of attention,” he says. “And we thought, if this partisan divide extends beyond rhetoric and into real economic decisions, these views might be reflected in residential choice.”
Gustafson and his colleagues recently published a research paper in the Journal of Financial Economics that reports their findings: Republicans are more likely than Democrats to purchase properties that are exposed to long-run sea level rise risks in coastal communities.
The researchers compared individual properties in the same ZIP code with similar amenities and similar elevation and proximity to the coast, and they found that houses exposed to sea level rise are increasingly more likely to be owned by Republicans and less likely to be owned by Democrats.
To illustrate the comparison process, Gustafson suggests imagining a hill of four or five feet rolling along a coastline. “Four or 5 feet above sea level would represent roughly 50 years of sea level rise,” he says. “So, you could have one property sitting just a few feet higher than another, very similar but less vulnerable to sea level rise than the house a few feet lower.
Or you could look at two coastal properties that are similar except one is protected from the ocean by a highway, a hill, or some other structure that serves as a barrier. The unprotected property is the one more at long-run risk.”
An important factor in the study, Gustafson points out, is that the properties most vulnerable to sea level rise are being sold at a discounted price. A few years ago, he and his colleagues published a paper that showed that among comparable properties, those that are more exposed to sea level rise sell for 5 to 10 percent less.
“Our previous findings are an important baseline for this research because it makes it very clear that we are not saying that Republicans or Democrats are making a bad choice,” he says. These properties are cheaper because they are exposed to a long-run risk. Republicans are buying these properties more — specifically, we find an 11-percent higher Republican share in exposed residences. We have no idea if they’re making the right or wrong decision. What we’re saying is that differences in the way that Republicans and Democrats think about climate risks is flowing through into major financial decisions and that Republicans are exhibiting different preferences for taking on long-run sea level rise risks.”
“If you have Republicans who are more willing to take on climate risks moving into coastal communities, it could affect local responses to climate change and how to adapt to those risks.”
The researchers also determined that partisan residential sorting — their term for the differences between Republicans and Democrats when purchasing coastal properties — doesn’t appear to reflect storm surges, which are a primary cause of short-term flood risks. Republicans and Democrats seem equally willing to buy houses that might be exposed to storm surges. As well, Gustafson and colleagues determined that, while partisan residential sorting exists among owners, whether they occupy the property or not, it’s not a factor not among renters.
Gustafson and his colleagues examined the extent to which partisan-based sorting on sea level rise exposure has changed over time, since future sea level rise projections have become increasingly dire. They found that between 2012 and 2018, the partisan gap of voters residing in a sea-level-rise-exposed property more than doubled.
“This phenomenon has been ramping up with increased attention to climate change,” he says. “What does that mean if this trend continues? If you have Republicans who are more willing to take on climate risks moving into coastal communities, it could affect local responses to climate change and how to adapt to those risks. We might find that households that are most likely to vote against climate-friendly policies and least likely to adapt may ultimately bear the burden of climate change.”