Real Estate Wealth Inequality and Vulnerability to Natural Disasters
Abstract
This paper shows that real estate wealth inequality affects vulnerability to environmental risks. I measure the heterogeneity in vulnerability to risks using dwelling-level French data for the universe of owner-occupied, rental, second, and vacant dwellings, linking these properties to the disposable income and real estate wealth of their owners. Homeowners owning only their primary residence are highly vulnerable to risk due to limited real estate wealth, whereas most owners of rental, second and vacant homes diversify their assets, exposing only a fraction of their real estate wealth to environmental risks. I show that these findings matter for adaptation policies. Place-based policies such as building infrastructures may fail to target the most vulnerable places if local ownership structures are not taken into account. In addition, a subsidized natural disaster insurance that would not target the most vulnerable households could benefit substantially the wealthy and well-diversified ones.
