Climate change is coming for America’s property market

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Insurance is supposed to signal risk. Policymakers should let it

Americans have been moving to beautiful places that are vulnerable to extreme weather. Florida, once a swampy frontier, is now America’s third-most populous state. It is also the state most often hit by hurricanes. By 2015, the Atlantic and Gulf coasts boasted more than $13trn of real estate. Look West and the story is similar. Homes are proliferating in the wildland-urban interface, where nature and development anxiously coexist and wildfire season seems never to end.

At the federal level the National Flood Insurance Programme, which offers subsidised flood insurance to homeowners in hazardous places, is drowning in debt. America’s Federal Emergency Management Agency , which runs the programme, is in the process of raising rates to keep it solvent. But property-owners are rebelling by cancelling their policies, and the politicians who represent them are threatening to intervene.

 

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