Garbarino, N., Guin, B. and Lee, J. (2022) The effects of subsidised flood insurance on real estate markets. Staff Working Paper No. 995. Working Paper. Bank of England.
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Publisher's URL: https://www.bankofengland.co.uk/working-paper/2022/the-effects-of-subsidised-flood-insurance-on-real-estate-markets
Abstract
Subsidised insurance against extreme weather events improves its affordability among households in high-risk areas but it can weaken the risk signal via property prices. Leveraging a granular data set of all property transactions and flooding in England, we study the effects of a reinsurance scheme which lowers insurance premiums for at-risk properties. We document that the introduction of this scheme increases prices and transaction volumes of flood-prone properties. This fully offsets the negative direct effects of flooding on property prices, with high-income areas and high-value properties benefiting relatively more. Our findings speak to the debate on transition risk and wealth redistribution in response to public interventions addressing climate change.
| Item Type: | Research Reports or Papers (Working Paper) |
|---|---|
| Status: | Published |
| Glasgow Author(s) Enlighten ID: | Lee, Dr Jonathan |
| Authors: | Garbarino, N., Guin, B., and Lee, J. |
| College/School: | College of Social Sciences > Adam Smith Business School > Accounting and Finance |
| Publisher: | Bank of England |
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