Evaluating the Impact of Climate Risk Scores on Property Purchase Decisions

An increasing number of organizations are providing climate risk information for real estate properties in the form of climate risk scores. We investigate individuals' attitudes toward the accuracy of such information and whether this information impacts participants' willingness to buy properties. In a series of online experiments, participants (N=612) were asked to rate the desirability of a range of properties based on different attributes, including price, size, and year built. These properties were paired with high, low, or no climate risk scores. Following these tasks, participants completed surveys measuring their beliefs and perceptions regarding climate risk. Experiment 1 manipulated risk-level between subjects and found that participants were less willing to buy high-risk properties than low-risk properties or properties with no risk information, with no significant differences between the last two. Experiment 2, manipulated risk scores within-subject and found that not only were the high-risk properties rated lower than no risk and low-risk ones, but participants were also more willing to buy the low-risk properties than those with no risk information. In Experiment 3, the same tendency to buy low-risk properties compared to high-risk ones was found among a sample of homeowners, regardless of the timeframe (12 months vs. 30 years) and the granularity (risk at the property-level vs. postcode-level) of the risk information. The findings also revealed that individual beliefs and perceptions of climate change did not impact willingness ratings for any of the property types, except in Experiment 3, in which the higher expected risk due to climate change was negatively related to willingness to buy high-risk properties. Together, the findings suggest that climate risk scores impact individuals' assessments of properties, regardless of their beliefs and experience with climate-related events.