. From tornadoes battering midwestern American suburbs to tennis-ball-size hailstones smashing the roofs of Italian villas, the severe weather brought about by greenhouse-gas emissions is shaking the foundations of the world’s most important asset class.
. By one estimate, climate change and the fight against it could wipe out 9% of the value of the world’s housing by 2050—which amounts to $25trn, not much less than America’s annual. It is a huge bill hanging over people’s lives and the global financial system. And it looks destined to trigger an almighty fight over who should pay up.
Yet if taxpayers cough up instead, they will bail out well-heeled owners and blunt helpful incentives to adapt to the looming threat. Apportioning the costs will be hard for governments, not least because they know voters care so much about the value of their homes. The bill has three parts: paying for repairs, investing in protection and modifying houses to limit climate change.
Physical damage might be forestalled by investing in protection in properties themselves or in infrastructure. Keeping houses habitable may call for air conditioning. Few Indian homes have it, even though the country is suffering worsening heatwaves. In the Netherlands a system of dykes, ditches and pumps keeps the country dry; Tokyo has barriers to hold back floodwaters. Funding this investment is the second challenge.