Van der Straten’s research shows that access to finance plays a decisive role in determining who adapts, who falls behind, and how effectively capital flows toward green innovation. ‘Markets alone can’t solve climate change,’ she says. ‘But if they are structured well, finance can become one of our strongest tools for adaptation and the green transition.’

Climate risks and housing inequality

One part of the research focuses on how physical climate risks – such as flooding and land degradation – affect housing markets. Van der Straten finds that while future flood risk can reduce property demand, the growing scarcity of safe, habitable land may eventually push housing prices up.

However, not all households can adapt equally. Financially constrained homeowners struggle to invest in resilience measures, widening what van der Straten calls the “adaptation gap.” Over time, this gap reinforces wealth inequality, as vulnerable households bear greater losses from climate events. She suggests that expanding access to green finance and encouraging rental models could help reduce these inequalities and support more efficient adaptation.

Politics and public adaptation

Van der Straten also looked at how inequality and political incentives shape public investment in adaptation, such as flood defences and infrastructure.

She found that political support for adaptation typically rises only once climate risks become visible and severe – a dynamic described as “political tipping.” Even then, short-term political horizons limit collective action.

‘Public adaptation suffers from a tragedy of the horizon,’ says van der Straten. ‘Voters and policymakers tend to value near-term benefits. But climate risks unfold over decades – therefore long-term financing mechanisms and redistributive policies that sustain public support for adaptation before crises strike are badly needed.’

Finance and the green transition

Beyond adaptation, Van der Straten also explored how capital markets influence the transition to a low-carbon economy. Using confidential European bond data, she found that companies with higher carbon emissions face higher borrowing costs – but that these were lower if they invested in green innovation.

This suggests that institutional investors are beginning to reward firms taking proactive steps toward decarbonisation. ‘Investors are not just observers,’ she says. ‘They can steer capital toward sustainable industries by pricing climate risk appropriately.’

Energy efficiency and inequality

Finally, Van der Straten turned to households’ investments in energy efficiency. Drawing on Dutch data, van der Straten finds that low-income families are less likely to make energy-saving improvements, while higher-income households – who also have larger carbon footprints – benefit most from subsidies.

This creates a policy dilemma between fairness and effectiveness. To reconcile the two, she argues, energy-efficiency programmes must be designed so that all households can participate

A financial lens on the climate crisis

Taken together, Van der Straten’s findings show that finance is not just part of the climate problem – it is key to the solution. By understanding how credit markets, investor incentives and politics interact, policymakers can design systems that channel capital toward resilience and sustainability.

‘If we align financial incentives with long-term climate goals,’ says van der Straten, ‘finance can be a force for resilience rather than risk.’