Sunk Assets: How Homeownership and Flood Risk Shape Attitudes toward Climate Adaptation and Climate Compensation

Climate change will cause enormous economic losses as increasing numbers of people lose their homes to wildfires and floods. In high-income countries, private homeowners often face the largest monetary losses, while insurance markets are increasingly failing to provide adequate coverage. As insurance companies withdraw from high-risk areas, pressure on governments to intervene grows, making property insurance a central political issue. This project examines public attitudes toward how climate-related costs should be distributed between individuals and the state. Using detailed data on property ownership, local flood risks, and original survey data from Sweden, the project provides new causal evidence on how awareness of climate risks shapes preferences for climate adaptation and compensation.