climate-distressed mortgage loans — might already be threatening the financial system. Lending data analyzed by Keenan and his co-author, Jacob Bradt, for a study published in the journal Climatic Change in June shows that small banks are liberally making loans on environmentally threatened homes, but then quickly passing them along to federal mortgage backers. At the same time, they have all but stopped lending money for the higher-end properties worth too much for the government to accept, suggesting that the banks are knowingly passing climate liabilities along to taxpayers as stranded assets.
Once home values begin a one-way plummet, it’s easy for economists to see how entire communities spin out of control. The tax base declines and the school system and civic services falter, creating a negative feedback loop that pushes more people to leave. Rising insurance costs and the perception of risk force credit-rating agencies to downgrade towns, making it more difficult for them to issue bonds and plug the springing financial leaks. Local banks, meanwhile, keep securitizing their mortgage debt, sloughing off their own liabilities.
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Americans have dealt with climate disaster before. The Dust Bowl … The places migrants left behind never fully recovered. Eighty years later, Dust Bowl towns still have slower economic growth and lower per capita income than the rest of the country. Dust Bowl survivors and their children are less likely to go to college and more likely to live in poverty. Climatic change made them poor, and it has kept them poor ever since. … A Dust Bowl event will most likely happen again.
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Once you accept that climate change is fast making large parts of the United States nearly uninhabitable, the future looks like this: With time, the bottom half of the country grows inhospitable, dangerous and hot. Something like a tenth of the people who live in the South and the Southwest — from South Carolina to Alabama to Texas to Southern California — decide to move north in search of a better economy and a more temperate environment. Those who stay behind are disproportionately poor and elderly.
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In these places, heat alone will cause as many as 80 additional deaths per 100,000 people — the nation’s opioid crisis, by comparison, produces 15 additional deaths per 100,000. The most affected people, meanwhile, will pay 20% more for energy, and their crops will yield half as much food or in some cases virtually none at all. That collective burden will drag down regional incomes by roughly 10%, amounting to one of the largest transfers of wealth in American history, as people who live farther north will benefit from that change and see their fortunes rise.
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The millions of people moving north will mostly head to the cities of the Northeast and Northwest, which will see their populations grow by roughly 10%, according to one model. Once-chilly places like Minnesota and Michigan and Vermont will become more temperate, verdant and inviting. Vast regions will prosper; just as Hsiang’s research forecast that Southern counties could see a tenth of their economy dry up, he projects that others as far as North Dakota and Minnesota will enjoy a corresponding expansion. Cities like Detroit; Rochester, New York; Buffalo and Milwaukee will see a renaissance,
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Sitting in my own backyard one afternoon this summer, my wife and I talked through the implications of this looming American future. The facts were clear and increasingly foreboding. Yet there were so many intangibles — a love of nature, the busy pace of life, the high cost of moving — that conspired to keep us from leaving. Nobody wants to migrate away from home, even when an inexorable danger is inching ever closer. They do it when there is no longer any other choice.
