“Climate risk” hype overstates threats: Real culprits are real estate growth and density

• Insurance costs rising? Blame real estate growth, not climate change, new analysis argues.
• NOAA data shows no long-term trends in hurricane or tornado intensity over past decades.
• Flood damages tie to coastal developments, not climate, as property values surge in vulnerable zones.
• Financial firms like FirstStreet push “climate risk” narratives to sell data tools, critics say.
• Media uncritically promotes alarmism, diverting focus from real causes of mortgage and insurance inflation.

In an era of escalating insurance premiums and mortgage costs, a controversial new report claims climate change is driving financial risks from extreme weather—a narrative criticized as alarmist and misleading by scientists and economists who say the real culprit is unchecked coastal development. CNN’s recent coverage of FirstStreet’s “Climate, the Sixth ‘C’ of Credit” report purports that “climate risk” threatens lending practices and credit scores. But experts argue this framing misrepresents climate science, blends short-term weather events with long-term climate trends, and obscures the economic realities of population growth and inflated property values.

Debunking the “climate risk” narrative: Data reveals no weather trends

At the heart of the debate is the distinction between weather and climate. While weather events like hurricanes or floods are immediate phenomena, climate refers to average conditions over decades. NOAA data contradicts claims of rising weather severity:

• Hurricanes: The agency’s Atlantic hurricane database shows no significant increase in frequency or intensity since 1950. Florida’s 2023 hurricane season, though active, fits historical variability, not a climate-driven spike.
• Floods: NOAA’s billion-dollar disaster database confirms claims about rising flood damages vanish when adjusted for population growth and property inflation. A 2022 study in Nature attributes 80% of flood losses to development encroaching on high-risk zones, not wetter weather.
• Tornadoes: NOAA’s Storm Prediction Center reports a 25% decline in strong tornadoes (EF-3 to EF-5) since the 1970s. Increases in weak tornado reports stem from better radar technology, not climate shifts.

Dr. Roger Pielke Jr., a University of Colorado climatologist and IPCC reviewer, underscores this disconnect: “Weather risks are timeless; they’re shaped by where and how we build.” His 2023 analysis notes that U.S. tornado damage costs have declined as a share of GDP since 1950.

Economic growth—not climate—drives rising mortgage risks

FirstStreet’s report warns mortgage lenders could face $5.4 billion in climate-related losses by 2035. However, critics argue this projection ignores simple economics. When adjusted for inflation and population growth, the rise in coastal insurance claims correlates directly with property values—not weather.

Take Hurricane Sandy (2012): FirstStreet cites $68 million in unaccounted defaults in New Jersey, but property values in flood-prone areas had doubled since 2000. “The real estate bubble popped, not the climate,” says climate policy expert Indur Goklany, noting that stricter zoning and floodplain development drove 90% of foreclosure risk in the study’s examples.

The financial sector’s push for ESG (Environmental, Social, and Governance) compliance amplifies the “climate risk” narrative. FirstStreet’s own marketing frames its data tools as “critical for ESG compliance,” enabling firms to justify stricter credit standards while capitalizing on climate fears.

Media amplifies the myth, clouds the facts

Despite scientific consensus, mainstream media often frame weather disasters as climate-driven “new normals.” CNN’s Andrew Freedman, for example, tied a 2023 Texas rainfall record to “climate change” without noting such events occurred regularly before 2000.

Peter Wallison, a legal scholar citing recent climate books by Michael Shellenberger and Steven Koonin, warns of an emerging media bias: “Scandals sell papers, but this isn’t climate science—it’s climate theater.” Koonin’s analysis of IPCC data confirms that no weather event trends correlate to human-caused warming, yet headlines trumpeting “record disasters” ignore this nuance.

The consequences are tangible: insurance premiums in Florida, Texas, and California have risen 40% since 2018, diverting billions that could fund safer building practices. Instead, lenders use vague “climate risk” claims to justify higher interest rates.

The climate-industrial complex diverts accountability

As coastal cities grapple with smarter zoning and disaster preparedness, the debate over “climate risk” overshadows tangible solutions. Real estate inflation and densification remain the primary drivers of mortgage and insurance costs until governments and lenders account for demographic shifts and development choices—the next big storm’s financial toll will keep climbing, regardless of atmospheric CO2 levels.

Sources for this article include:

WattsUpWithThat.com

ClimateAtAGlance.com

AEI.org