Who Bears Climate-Related Physical Risk?

This paper combines data on current and future property-level physical risk from major climate-related perils (storms, floods, hurricanes, and wildfires) that owner-occupied single-family residences face with data on local economic characteristics to study the geographic and demographic distribution of such risks in the contiguous United States. Current expected damage from climate-related perils is approximately $19 billion per year. Severe convective storms and inland floods account for almost half of the expected damage. The central and southern parts of the U.S. are most exposed to climate-related physical risk, with hurricane-exposed areas on the Gulf and South Atlantic coasts being the riskiest areas. Relative to currently low-risk areas, currently high-risk areas have lower household incomes, lower labor market participation rates, and lower education attainment, suggesting that the distribution of climate-related physical risk is correlated with economic inequality. By 2050, under business-as-usual emissions, average expected damage is projected to increase monotonically with current average expected damage, which implies that long-term policies that aim to mitigate climate-related physical risk are likely to be progressive.