Here comes the flood: the climate risk of residential mortgages in Rimini

Ivan Faiella () and Luciano Lavecchia
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Ivan Faiella: Bank of Italy

No 925, Questioni di Economia e Finanza (Occasional Papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: This paper seeks to assess the expected reduction of the residual debt for the purchase of properties included in the mortgage portfolio of some banking intermediaries operating in an area particularly exposed to the risk of coastal flooding (Rimini) by evaluating different scenarios, including the implementation of an adaptation intervention (the Parco del Mare). For these analyses, we cross-referenced the data on bank assets from a sample of banks with the data on expected damages (distinguished by scenario and return periods) elaborated by researchers at the Centro Euro-Mediterraneo sui Cambiamenti Climatici Foundation (CMCC). The estimated losses, in relation to the value of the properties by census section, were applied to the mortgage portfolio of the banks participating in the project. The results show that the coastal barrier significantly reduces the losses in the mortgage portfolio, highlighting a significant heterogeneity of the impact among the intermediaries involved. It is also emerges that the banking system needs to improve the quality of the information required to identify the assets exposed to such risk and to assess their vulnerability should the event materialize.

Keywords: climate change; coastal flooding; mortgages; data gap (search for similar items in EconPapers)
JEL-codes: G21 Q51 Q54 R32 (search for similar items in EconPapers)
Date: 2025-04
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