Understanding climate risks facing housing finance stakeholders in British Columbia: Interview-based empirical evidence
Date
2024
Authors
Howley, Julia
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Abstract
The effects of climate change are yielding unprecedented extreme weather events in British Columbia. The impacts of these climate changes are felt across many sectors, including the housing finance sector. This study seeks to gain an understanding of how physical climate change risks are manifesting in British Columbia (BC)'s housing finance sector and impacting homeowners and homebuilders, and to uncover potential market failures, with a goal of developing recommendations for policy and regulatory responses. Methods comprise conducting eighteen (18) in-depth semi-structured interviews with stakeholders, including: homeowners, construction industry representatives, mortgage insurers, insurance industry representatives, financial lenders, real-estate industry representatives, academic researchers, data providers, and financial and technical regulators. Interview findings focus on gaps or inefficiencies in BC’s housing finance ecosystem covering five key themes: (i) assessing and pricing risk, (ii) lender risk concerns and disclosures, (iii) improving data, modeling, and transparency, (iv) insurance accessibility (v), and adaptation education and incentivization. Based on interview findings, this study recommends policy and regulatory interventions be explored to address the gaps and market failures present within BC's housing finance ecosystem. Recommendations include expanding current and emerging adaptation policy and risk disclosure regulations, improving risk awareness, investing in data and modeling capacities, encouraging cross-collaboration between stakeholders, setting industry standards, incentivizing adaptation measures, and prioritizing risk mitigation.
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Keywords
Climate risk, Housing finance, Market failure, Wildfire risk, Flood risk, Adaptation, Mitigation, Insurance risk, Lending risk, Climate modeling, Financial disclosure, Climate data