DO FLOODS HAVE PERMANENT EFFECTS? EVIDENCE FROM THE NETHERLANDS

Trond G. Husby, Henri de Groot, Marjan Hofkes and Martijn Dröes

Journal of Regional Science, 2014, vol. 54, issue 3, 355-377

Abstract: type="main">

This study investigates the short- and long-run impact on population dynamics of the major flood in the Netherlands in 1953. A dynamic difference-in-differences analysis reveals that the flood had an immediate negative impact on population growth, but limited long-term effects. In contrast, the resulting flood protection program (Deltaworks), had a persisting positive effect on population growth. As a result, there has been an increase in population in flood-prone areas. Our results suggest a moral hazard effect of flood mitigation leading to more people locating in flood-prone areas, increasing potential disaster costs.

Date: 2014
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Working Paper: Do Floods have Permanent Effects? Evidence from the Netherlands (2013)
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