Markets do not believe in global warming

According to this alarmist web site, a number of cities in the US and presumably elsewhere are soon going to be flooded due to rising sea levels (that is, future rising sea levels that will inevitably occur but that for some reason we  have not seen yet). These predictions are consistent with the official view promoted by the IPCC. Regardless of whether these predictions are correct (this is not the issue here), we would expect them to be taken at least mildly seriously by market participants. In particular, land prices in the soon-to-be-flooded areas should be falling as doomsday gets nearer.

I obviously have no time to conduct a serious econometric study, but the example of Bay Harbor Islands, Florida, is a case in point. According to the official view, enough CO2 has been released into the atmosphere that this community is certain to end up 100 % under water. Yet as this chart makes clear, real estate prices in that community have risen by some 50 % since their 2010 trough, which is much higher than average house prices throughout the state of Florida, that have recovered by only 15 %. (A similar conclusion can be reached with the slightly less exposed city of Key Biscayne, FL).

This evidence suggests that markets lend much less credibility to IPCC reports than politicians and the mainstream media.

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One thought on “Markets do not believe in global warming

  1. So what? At the time of the great navigations markets certainly did not believe that the earth was round. Should informed agents of those times, for that reason, have cast scientists who said the earth was round under suspicion?

    This post is quite representative of the cloister mentality that, happily enough, economics is beginning to depart from.

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