Asymmetric information provision and flood risk salience

Dongxiao Niu, Piet Eichholtz and Nils Kok

Journal of Housing Economics, 2025, vol. 68, issue C

Abstract: This paper examines the impact of information provision on the capitalization of flood risk in the housing market. We exploit a climate risk disclosure program and a subsequent flooding event in the Netherlands, using a difference-in-differences framework. The results indicate that annual flood risk communication letters sent to residents in flood-prone areas have minimal impact on housing prices. In contrast, a small-scale flood event triggers a 3.4 % decline in house prices, demonstrating the effectiveness of direct experience in influencing price adjustments. This price effect is short-lived and is observed only among local buyers who have access to both the letters and firsthand flood experience, while non-local buyers remain unresponsive. We also observe an increase in the time on market and listing-to-sales ratio among local buyers, alongside a rise in the renter-occupied household ratio following flood risk information provision. Small-sized, high-educated, and risk-averse families tend to relocate from the high-risk area. The results in this paper provide insights for policymakers grappling with how to reduce information asymmetry in housing markets in the face of increasing climate risks.

Keywords: Flood risk; Information asymmetry; Housing prices; Climate adaptation; Migration (search for similar items in EconPapers)
JEL-codes: D10 Q54 R23 R30 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jhouse:v:68:y:2025:i:c:s1051137725000191

DOI: 10.1016/j.jhe.2025.102060

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