This website uses cookies.

By clicking the "Accept" button or continuing to browse our site, you agree to first-party and session-only cookies being stored on your device to enhance site navigation and analyze site performance and traffic. For more information on our use of cookies, please see our Privacy Policy.

  1. Home
  2. ASSA Annual Meeting
  3. 2026
  4. Preliminary Program
  5. Sustainability, Real Estate, and Mortgages
« Back to Results

Sustainability, Real Estate, and Mortgages

Paper Session

Saturday, Jan. 3, 2026 8:00 AM - 10:00 AM (EST)

Loews Philadelphia Hotel
Hosted By: American Real Estate and Urban Economics Association
  • Chair: Piet Eichholtz, Maastricht University

Adapting to Risk? How Investor Beliefs Shape Climate Adaptation in Real Estate Portfolios

Simon Camilo Buechler
,
Miami University
Juan Palacios
,
Maastricht University
Xudong Sun
,
Maastricht University
Siqi Zheng
,
Massachusetts Institute of Technology

Abstract

As environmental and physical risks intensify, investors face mounting pressure to adapt their investment strategies to physical climate risks. This paper examines the impact of climate risks on real estate portfolio investment decisions. We build a unique dataset where we can identify changes in the composition of purchases and sales for real estate portfolios across the US and the investments in the resilience of individual assets. Using localized heat events as quasi-exogenous shocks and a difference-in-differences approach, we find that portfolio managers adjust their strategies in two key ways. First, they shift investments toward properties with lower-risk exposure. Second, they increase spending on protective building improvements and risk-related insurance for vulnerable properties. This paper contributes to the literature by analyzing how institutional investors integrate physical climate risks into portfolio strategies for their real estate investments.

Green Mortgages

Joao Cocco
,
London Business School
Bernardo Mendes
,
London Business School and CEPR
Lakshmi Naaraayanan
,
London Business School

Abstract

Using data on the universe of mortgages on offer in the United Kingdom, we study the prevalence and features of green mortgages, used for the financing of energy-efficient properties. We uncover substantial heterogeneity in their financial benefits. Products with preferential rate provide discounts of 9-35 basis points (annual gains of £180-700), while those with upfront cashback have annual equivalent gains of £49-56. The former (latter) are more prevalent in the investor (owner-occupied) segment of the mortgage market. We exploit market features to show that green mortgages with cashback offers are used for customer acquisition. We do not find support for the hypothesis that the benefits of green mortgages are due to lower financing risk.

Climate Risk, Soft Information, and Credit Supply

Laura Álvarez-Román
,
Bank of Spain
Sergio Mayordomo
,
Bank of Spain
Carles Vergara-Alert
,
IESE Business School
Xavie Vives
,
IESE Business School

Abstract

We study the impact of climate risk on credit supply using a unique loan-firm-bank-level dataset on all wildfires and corporate loans in Spain. Our findings reveal a significant decrease in credit following climate-driven events. This result is driven by diversified (outsider) banks, which reduce lending significantly to firms in affected areas. In contrast, geographically concentrated (local) banks, with superior soft information access, reduce credit to opaque firms to a significant lesser extent without increasing risk. Moreover, employment declines in affected areas where local banks are absent.

Biodiversity Protection Policy and Housing Markets: Supply, Demand, and Speculation

Maxwell Sacher
,
University of Texas at Austin
Shikhar Singla
,
University of Texas at Austin

Abstract

Government financing and regulatory actions have been pledged to address biodiversity
loss, yet their economic impacts remain unclear. We construct a county-level measure of exposure to potential conservation efforts. Exploiting the 30×30 initiative as a plausibly exogenous
shock, we find that a one standard deviation increase in regulatory risk increases house prices
by 0.6%. Effects are weaker in counties reliant on nature-intensive industries, but stronger in
land-abundant counties, where supply is more elastic and demand for nature amenities is high.
Speculative behavior magnifies the price increase. Overall, conservation policies satisfy nature
demand but entail trade-offs for growth and housing affordability.

Discussant(s)
Erkan Yonder
,
Concordia University
Nils Kok
,
Maastricht University
Dragana Cvijanović
,
Cornell University
Stefany Burbano
,
Maastricht University
JEL Classifications
  • G2 - Financial Institutions and Services
  • Q5 - Environmental Economics