Climate Adaptation
Paper Session
Monday, Jan. 5, 2026 10:15 AM - 12:15 PM (EST)
- Chair: Dev Patel, Massachusetts Institute of Technology
Path Dependence in Climate Adaptation
Abstract
While climate change is expected to increase natural disaster damages in the coming decades, a growing body of evidence suggests that mandatory adaptation standards for houses in high-risk areas can substantially reduce disaster losses. However, adaptation standards are typically based on risk levels prevailing at the time of house construction, and it remains unclear whether such static minimum standards will be effective as risk increases over a house’s lifetime. In this paper, we study the dynamics of flood adaptation investments using a comprehensive dataset on the universe of elevation certificates issued after 2017 in Florida for new single-family homes, merged to parcel-level information on property attributes and historical flood maps. Leveraging granular changes in flood maps over time, we find that the elevations of newly constructed properties are responsive to changes in adaptation standards, with a one-foot change in the minimum elevation standard leading to a 0.5 foot change in average house elevations. While we do observe bunching at minimum elevation levels, 70% of homes are elevated substantially above the minimum standard, suggesting that a combination of risk perceptions and premium incentives drive additional adaptation. While these results suggest that the adaptation of new homes will respond to increasing risk, we find little evidence that pre-existing homes are elevated in response to changing standards. The dependence of adaptation on standards prevailing at time of construction suggests a lock-in effect: backward-looking standards lock houses into adaptation that becomes out-of-date as natural disaster risk rises in the future. In ongoing work, we test whether adaptation investments are forward looking and consider the implications of our findings for optimal adaptation standards with dynamic risk.The Value of Wetlands in Reducing Flood Losses
Abstract
Wetland conservation is a potentially effective strategy in managing flood risk under climate change, but the economic value of wetlands in reducing flood damages remains uncertain. We address this gap by estimating the effects of annually observed changes in wetland area between 1985 and 2023 on flood insurance claims payments. We employ a “repeat claims” approach, which compares claims for single properties before and after they experience changes in upstream wetland area over time. We control for variation in flood severity, independent of wetland area, using observations of daily rainfall within the watershed where the property is located. We find that the loss of one hectare (ha) of upstream wetlands increases claim amounts for individual properties by an average of 0.01% – 0.03%, depending on hydrologic distance, whereas gains in wetland area have no effect. Based on these effects, we estimate that total wetland loss since 1985 has increased flood insurance claims payments by $8.25 billion or 7.3%, disproportionately affecting low-income households and people of color. We also calculate the marginal value of wetlands in reducing flood losses for each sub-watershed in the U.S. (N=83,000), based on the presence of downstream properties that are exposed to flood risk. The distribution of marginal values is highly right-skewed, where the median is $88·ha-1 and the 90th percentile is $17,000·ha-1. In 13% of sub-watersheds, marginal benefits of flood mitigation outweigh costs of land conservation. We also estimate the total value of flood mitigation benefits provided by wetlands that may no longer be protected under the Clean Water Act under the Trump Administration. Policymakers and government agencies can use this information for conducting benefit-cost analyses on proposed regulations and spending, designing land use policies, and pricing flood insurance.Discussant(s)
Ashwin Rode
,
University of Chicago
Abigail Ostriker
,
Boston University
Dev Patel
,
Massachusetts Institute of Technology
JEL Classifications
- Q5 - Environmental Economics
- Q0 - General