The Hole, a neighbourhood in New York on the border of Brooklyn and Queens, deserves its nickname. Sitting nine metres or so below the surrounding area, it was used by the mafia as a dumping ground for corpses. When I visited earlier this year it was filled with mobile homes sitting on bricks, boarded-up houses and ever-present pools of standing water. When storms come they drain into the Hole from nearby streets. The neighbourhood is not connected to the New York sewage system; cesspools and septic tanks overflow. 

This is one of New York’s most exposed neighbourhoods to climate change. With the groundwater so close to the surface, it does not take much to cause flooding. There are few good options to keep it habitable. The city is consulting to find a plan to alleviate the drainage problems while residents have called for the area’s sewers to be connected to the rest of the city’s, which would require effluent to be pumped uphill. Some environmentalists suggest it should be restored to the marsh it had been before New York City was built over the top. Many homeowners are simply waiting for the city to buy them out. 

The residents of the Hole are at the sharp end of a problem that will be faced by millions of homeowners over the next few decades, although few realise it. As our briefing this week outlines: global warming is coming for your home. 

Homeowners worldwide face a potential $25trn hit from the warming planet, a sum roughly equivalent to America’s annual GDP. The costs come from the “physical risks” associated with climate change—these include attention-grabbing events such as storms, floods and fires but also more mundane things like subsidence risk. Then there are “transition risks”; in other words, the cost of making housing more climate-friendly, by renovating homes to become more energy-efficient or using renewable energy rather than fossil fuels for heating. 

Heel-dragging over who should pay for all of this could make the bill even higher. Government subsidies for insurance are encouraging people to move to high-risk areas, as are expectations of a bailout once disasters hit. That also stores up risk in the financial system, where mortgages are used as collateral for banks and state-backed “insurers of last resort” take on the homes in places like hurricane-prone Florida and wildfire-prone California—areas that private insurers do not want to touch. Homeowners tend to be a politically powerful constituency. Expect a noisy fight over who foots the bill. 

Thanks for reading this edition of the Climate Issue. If you have any feedback, you can reach us at [email protected]. Finally, next week we will launch Middle East Dispatch, our latest newsletter, bringing together our coverage of a complex and consequential region. You can sign up here.