As banks and other institutions get more detailed models, people who are most affected by climate change will face difficulties in getting financing.
We now live in a world where climate gentrification exists: People and institutions are starting to assess and appraise properties based on their susceptibility to climate impacts. The idea was largely hypothetical as recently as 2016, but over the past two years a decent body of work has emerged, much of it from U.S. academics, showing that both mortgage lenders and property buyers are pricing in some forms of climate risk.
Knowledge about climate change impacts, whether accurate or not, is already driving decisions by financial institutions that in turn affect livelihoods. Research by Jesse Keenan, an associate professor at Tulane University, and Jacob Bradt, a Ph.D. candidate at Harvard, found that lenders in some coastal and flood-prone areas are already requiring higher deposits before providing mortgages. They are also more likely to move such mortgages off their books via securitization, including to the government-sponsored entities Fannie Mae and Freddie Mac.