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From low-snow winters to smoky summers, climate-driven stressors are becoming a more familiar part of life across Colorado and the West. While these events can feel like short-term disruptions, they’re starting to shape bigger decisions including where people choose to live, how businesses invest and what buyers are willing to pay.

Ryan C. Lewis, an associate professor of finance at theÌýLeeds School of Business, studies how climate risks show up in housing markets, insurance costs and business decisions. Â鶹Ãâ·Ñ°æÏÂÔØBoulder Today recently spoke with Lewis about how extreme weather affects local economies, why some risks are easier to measure than others and what consumers should keep in mind.

This winter’s low snowpack has raised concerns across Colorado. How do seasons like this as well as drought, wildfire and floods affect local economies?

There are two main channels. The first is the immediate impact—disasters disrupt business activity, damage infrastructure and housing, and slow or halt normal operations. With drought, farmers can’t grow crops and water costs can rise. In a low-snow winter, ski activity drops.

But there are also longer-term effects. In myÌý, we find that even places not directly hit but exposed to smoke see lasting changes. People go out less at first, but even after the smoke clears, behavior shifts. Firms are more likely to exit than enter, and investment declines. We think expectations play a role—people start to see these events as signals of worsening conditions.

Are housing markets starting to factor in climate risks?

There’s some evidence they are, but it’s a difficult question. Climate risks are uncertain and often affect broad regions, which makes it hard to compare similar homes with different levels of exposure.

One exception is sea level rise, which is easier to pinpoint geographically. In earlierÌý, we compared very similar homes—same quality and current risk—but with different long-term exposure to sea level rise. We found that homes facing higher future risk sold at a discount, and that discount grew over time, especially after around 2012 when climate risks gained more public attention.

What about risks like wildfire or drought—are those showing up in home prices?

That’s trickier. Wildfire risk is somewhat localized, but the most exposed homes—like those in neighborhoods bordering wildland areas—are also very different in other ways from homes in town, which makes clean comparisons difficult.

That said, given the increased attention on wildfire risk, I’d expect some pricing effects are starting to emerge. They’re just harder to measure.

Insurance costs are rising. How much of that is tied to climate risk?

Climate risk is a big factor, though not the only one—there’s also inflation and better risk assessment. But higher disaster risk is clearly pushing costs up.

That has a direct effect on home pricing: When insurance gets more expensive, people are willing to pay less for a home. It raises the total cost of ownership.

There’s also an indirect effect. In research on flood insurance subsidies, we found that when subsidies are removed and premiums rise, prices drop more for homes exposed to future risk—not just current risk. That suggests higher costs push people to pay more attention to long-term exposure. In other words, rising premiums get people to do more homework.

Beyond housing and insurance, how do climate risks affect consumers more broadly?

At a high level, climate change makes places more expensive to live in and maintain. If ski resorts get less snow or cities face more smoke, those places become less attractive.

Over time, people adapt. They may move, travel elsewhere or invest in new infrastructure. For example, if skiing declines in Colorado but remains strong in Canada, you could see more travel or even migration there.

There’s also adaptation at a smaller scale. Air conditioning is a great example. Heat waves used to cause hundreds of deaths, but today far fewer people die because cooling has become widespread and affordable. So while climate risks do have real impacts, people and markets also adjust in meaningful ways.

What are some practical ways consumers can factor climate risk into financial or housing decisions?

There are more tools than ever. You can look up an address and see projections for flood, fire or heat risk, both now and in the future.

That said, it’s important to understand how uncertain these predictions are. Many models include wide ranges of possible outcomes. For example, snowpack in Colorado might be projected as stable on average, but some models predict significant declines while others predict increases. That information about the downside risk is very important for a person who wants to live where skiing is possible.

So it’s not just about the average forecast—it’s about the range of possibilities. Looking at those uncertainty bands can be just as important as the headline number.

Is there anything else people should understand about how climate risk is shaping markets?

One important area is how markets themselves may evolve. In the U.S., we don’t have very flexible systems for trading resources like water across regions, largely because of regulation.

That could change. More flexible markets for water, insurance or other climate-related risks could help allocate resources more efficiently. For example, if producing artificial snow becomes more valuable, ski resorts might eventually be able to purchase water more easily.

I’m somewhat optimistic that climate-related insurance markets for things like water andÌý insurance can help people and businesses adapt. They’re not a perfect solution, and they need to be designed carefully, but these markets could eventually ease short-term disruptions and support long-term planning in a changing climate.