Adaptation Infrastructure and Its Effects on Property Values in the Face of Climate Risk

Abstract

We evaluate the effect of climate adaptation infrastructure investments on property transaction prices, using data on over 400,000 property transactions and 162 infrastructure projects in Miami-Dade County, an area that is highly vulnerable to flooding and sea level rise due to climate change. Exploiting the timing and siting of different adaptation projects in Miami-Dade, we are able to identify significant gains in property values after completion of adaptation infrastructure projects. These gains are concentrated in areas close to the project and for projects that are visually identifiable. Our results suggest an aggregate mean benefit, net of adaptation cost, of about $0.68 million per project and almost $300 million in aggregate net benefits for all projects in our sample. Most projects generated positive net benefits, indicating that the vast majority of adaptation efforts are being placed in areas passing a benefit-cost test. JEL Codes: Q51, Q54, Q58, R31, R38