Climate Changes Property: Disaster, Decommodification, and Retreat


Repetitive losses from natural disasters are a multi-billion-dollar problem, and climate change threatens to make it worse. However, the problem is avoidable, and this Article offers a new analytical framework to explain how.

While some disaster losses are inevitable, we argue that recurrent losses are a preventable consequence of real-estate market failures and policy shortcomings. By applying the concept of “adjustment failure costs,” a recent contribution to property theory, we present a fresh perspective for understanding and alleviating the economic and human costs of disasters.

Adjustment failure costs describe the costs (or losses) that arise from difficulties in markets reaching efficiency. We contend that the problem of repetitive-loss properties is a manifestation of high adjustment failure costs. Vulnerable areas experience wave after wave of death and destruction before investments in disaster-prone properties slow. Meanwhile, federal disaster policies impede market adjustments by subsidizing hazardous redevelopment. Thus, the real estate market’s response to disaster risk remains laggard despite a painfully pricey set of lessons.

Appreciating recurrent disaster losses as a symptom of high adjustment failure costs informs both when policies should intervene in real-estate markets and how such interventions can prevent future losses. In particular, adjustment-failure-cost analysis can guide deployment of risk reduction efforts like buyouts. Additionally, policies seeking to prevent recurrent losses should aim to lower adjustment failure costs by altering how vulnerable real estate is treated as a market commodity.

Based on these insights, the Article suggests specific changes to federal disaster laws to avoid repetitive disaster losses and inform climate change adaptation efforts


climate change, adjustment failure costs, flood insurance, natural disasters, recurrent disasters, FEMA, NFIP, real estate markets

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81 Ohio State Law Journal 331 (2021)


COinS Michael Pappas Faculty Bio