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As I continued to investigate climate change and my house, I came across this interesting article.

It helped answer I question I had:

Could climate change raise my property taxes and lower my resale value even if it didn’t physically touch my home?

The answer looks to be an increasingly firm yes.

Moody’s Investor’s Service, a credit rating agencies, is going to increase the weight of climate change risks in evaluating the creditworthiness of governments.

So what does that do with home ownership?

Credit Rating Agencies influence interest rates for governments.  A government with worse creditworthiness needs to pay higher interest rates to borrow money (after all, there is a higher risk of default).

And to pay these higher interest rates it will either need to set higher taxes or cut back on spending for its constituents.

Since the impacts of climate change (such as extreme weather, rising coastlines) are increasing, it’s logical for rating agencies to give it larger weight in determining creditworthiness.

After all, climate change will impact the health of infrastructure, possibly destroy assets and potentially disrupt the local economy.

Rating Agencies’ increased focus on climate change risks and preparedness could increase financial strain on regions that are likely to face significant damage from climate change and governments ill-prepared for adapation.

Florida is an illustrative example – Miami will likely flood and since the bedrock is limestone, sea walls will probably be ineffective.  Credit agencies are likely to notice this risk and downgrade Florida’s creditworthiness.

Florida property owners would need to pay higher property taxes and receive less services from the Florida government to compensate for the credit downgrade (even  for those whose properties are not physically impacted by climate change) .

And this would probably be exacerbated by the large spending Florida would need to combat climate change consequences like flooding.

This would not only increase the cost of house ownership but obviously make the house less attractive to own, impacting the resale value.

So it’s not only the physical impact of climate change that we need to be concerned about – also the economic impact.

Next: How Climate-Proof is your Local Economy?

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