'Finance has come to have an incredible influence over how climate change is being governed, how climate challenges are defined, and how we respond to them'

In this episode, we speak with Zac Taylor (TU Delft) about what prompted their initial interest in climate-risk governance, their work at the TU Delft and their ambitions for an inclusive approach to the governance of climate change.

By Vanessa Ntinu

Thanks for sitting down with us, Zac! You have such an expansive and interesting background that is essentially centered around mitigating climate risks in cities - tell us what sparked your initial interest in this theme?

Zac Taylor pictured in the fore, wearing glasses and with a moustache. Black background. Well, thanks for having me. So, I grew up in Florida, in the United States - a place that is vulnerable to hurricanes, sea-level rise, and extreme heat.  In addition to this, Florida has an economy that is built around urban development and real estate, and Florida cities became a central setting in the story of the global financial and housing crisis in 2008. I witnessed this crisis firsthand, both as a Floridian and as a student of cities. At the time, I was completing my studies in urban planning at Berkeley.

All these different threads, personal interests, and experiences coalesced for me in a deep curiosity about how Florida will adapt to climate change. What was going to happen to this place I care so deeply about? Much of Florida is incredibly low-lying and catastrophe-exposed, and some parts, like Miami, have a very porous limestone geology. There are many communities that are going to find it very difficult to defend themselves against rising seas and other aspects of climate change. So, the question for myself has always been: how are we collectively going to tackle this challenge? How are we going to do it in an equitable way? What does it mean for these places, and the people who live there?

This is essentially what got me on my academic journey. I did a Ph.D. and then a Postdoc and now I'm based at TU Delft, but my journey started with wanting to answer these big questions about the future of Florida cities and other places with shared struggles.  

What are certain correlations you see between climate change (and its prevention) and migration/diversity?

A big question! See, this correlation depends so much on geography. There's the question of climate change itself and this is a very place-specific conversation. The rates of change and the physical vulnerability of a place are very different as well. We also have the question of climate action, about how we can address the causes and impacts of climate change, and this also varies from place to place. How we respond in Florida is going to be very different from how we respond in the Netherlands because there are different capacities to deal with the climate challenges in each context. Different cities and countries have inherited varied types of vulnerability in our communities, including physical vulnerabilities like building in places that we should not have built, as well as social dimensions, such as how historic patterns of spatial development now unequally expose people to hazards along lines of difference, including race, gender, and class.

These social questions can have damning repercussions on the most vulnerable in society. We might be somewhat familiar with the term redlining – a historic process where home lending was not extended to certain communities on the basis of race, in the US context. What if climate redlining emerges? What if we have an investor or lender says, “I don't want to lend at this place because the real estate there is too risky?” That institution may be managing their climate risk, but who is living in those risky places? How are we going to make sure that they get the capital they need so that they can either protect themselves or leave a harmful place in a way that is managed and fair? These are among the many important questions we need to consider when we’re trying to address climate action.

What if climate redlining emerges? What if we have an investor or lender says, “I don't want to lend at this place because the real estate there is too risky?”

Both your doctoral research and post-doctoral research seem incredibly captivating and are centered on the same themes. For the layman, can you elaborate on this research? What were your most memorable/significant findings?

Well, there was a big political controversy at the beginning of my Ph.D. research. The governor of Florida quite notoriously banned state officials from discussing climate change in official business. This was just as new waves of scientific knowledge were pointing to the magnitude of Florida’s vulnerability to climate change – and just when the real estate crisis was finally ending, and the building was resuming full speed on the coast. This made me want to understand what systems allow us to build in places that we know are vulnerable.

I thought I was going to do a Ph.D. where I was talking to other urban planners and elected officials and activists to get a sense of this. And I did talk to those people! But I quickly noticed that almost everyone kept pointing to finance, and to insurance, as key drivers of what would make high-risk development possible today – and what might make it economically impossible at some point in the future. I am roughly paraphrasing here, but I remember one urban planning professional saying that “we can have all the plans we want around climate change, but they don't really mean anything at the end of the day if the insurance industry decides to pull their capital out of Florida.” This made me curious about insurers and reinsurers (or insurers for insurers), and keen to understand how and why they have this much power.

In essence, Florida’s real estate market relies on access to a part of the global financial market that specializes in taking risks from the insurance companies that you and I might buy a policy from. These financial institutions take on parts of the risk held by our insurers, and they agree to pay the insurer in case they have unexpectedly large losses because of a disaster.  These same companies turn this risk into financial products, called securities, that are sold to investors. This keeps the insurance system stable, even though there are trillions of dollars of risk insured globally. And this financial market really has a profound influence over the way we build and finance housing in high-risk areas. In summary, based on my experience in Florida, but also here in the Netherlands, in Singapore, and elsewhere, finance really has come to have an incredible influence over how climate change is being governed, how climate challenges are defined, and how we respond to them. It really is going to shape, and is already shaping, how we plan for climate change at a local level.

Are there particular differences you see between real estate-finance climate risk governance in Florida vs. the Netherlands vs. Singapore?

I would say Florida and Singapore are the two that are the most far apart out of the three, with the Netherlands in the middle. Florida has a planning and housing system that is really localized and driven by individual property rights, for example. I remember a compelling anecdote from a planner in South Florida who was talking about how they're struggling to convince hundreds of property owners, each in their single-family houses on canals, to raise their seawalls on their property to stop flooding. Each house has its own seawall, and they own it, and they are responsible for taking care of it and raising it. And if they don’t act together, that limits how effective the adaptation strategies.

In Singapore, on the other hand, real estate markets are important to their economy and political system. The difference, however, is that the Singapore state is a city-state, it's an island. They treat land as an extremely scarce resource, and they own almost all of the land. And what that means is that these kinds of questions about individual property rights don't apply in the same way.

Finance is going to shape, and is already shaping, how we plan for climate change at a local level.

Tell us a little about the work you do at the TU Delft.

Well, I had been in conversation with several of my colleagues from the TU Delft for many years about my research interests before I joined the university. I’d been in conversation with them because I knew that there were several interesting parallels between Florida and the Netherlands and other places. I had the opportunity to come here after my first Postdoc at KU Leuven to build out the faculty's expertise on climate risk, finance, and the built environment.

A large piece of what I've been doing is helping to build a new research program that focuses on creating integrated approaches to real estate development and building in low urban environments. We have been engaging in conversation with real estate developers, investors, insurers, spatial planners, ministry officials, and tons of other academics from different disciplines. We are a very big group of people thinking about what the knowledge gaps are here in the Netherlands. What do we know about the relationships between real estate and finance and climate risk? We’ve realized t's not just a physical risk problem, but it's a governance problem – about how ways to tackle climate change in our real estate, finance, planning, and infrastructure should be joined up, and who will be responsible for which aspects of taking action. What do we already know about this governance challenge? What do we think we might need to know? So, we've been mapping out this issue and we are in the process of finishing a White Paper on it. Throughout this process, we have wanted to ensure that everyone is included at the table. Risks, and the costs of addressing them, will be experienced differently by different people, and we want to create an inclusive and frank space where everyone can share and unpack this societal challenge together. ​​I'm super excited to see where the agenda goes. 

Alongside this, I'll also be working with the Resilience Delta initiative, as the research coordinator for the Delta Systems theme, beginning this spring.

What is a piece of advice you would give to us as a migration and diversity Centre? Are there certain themes we should also integrate into our work?

I don't want to bang a broken drum, but I always think about who needs to be in the room when we’re thinking about knowledge building or action. It’s a hard question because we might not always know at first. I think it is very important for organizations and scientists to think about that. Working with that aspiration and priority, to begin with, is important. What are the values we want to espouse in the process of working through a complex societal problem, like climate action? For me, I want the people who have power to be in the room, and I also want people who are going to be most impacted and who have something to say about it to be in the room, too. It's very hard to facilitate that kind of dialogue and I will not say that I have cracked the code on this one, but I am committed to trying my best.