Estimating the Flood Risk Discount: Evidence From a One-off National Information Shock

Tom Gillespie (), Ronan Lyons () and Thomas K. J. McDermott
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Tom Gillespie: University of Galway
Thomas K. J. McDermott: University of Galway

Environmental & Resource Economics, 2025, vol. 88, issue 5, No 2, 1195-1212

Abstract: Abstract Flood risk is a highly pervasive and costly natural hazard globally. With significant increases in flood risk expected over coming decades, future exposure to flood risk and associated costs will depend heavily on how private consumption decisions respond to new information about risk. We exploit a one-off national information treatment in the form of the release in 2011, for the first time, of detailed flood risk maps for Ireland, to test the effect of new information about flood risk on housing prices across a national housing market. We combine rich dwelling-level information on over 475,000 dwellings for the period 2006-2015 with detailed official data relating to flood risk, events and defences. Our core finding is that information matters. The price of housing responded clearly to the release of flood risk maps at the end of 2011, with the emergence of a 4% price discount for dwellings at risk of flooding.

Keywords: Flood hazards; Hedonic prices; Urban planning; Information updating; Risk assessments (search for similar items in EconPapers)
JEL-codes: H54 Q54 R21 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s10640-025-00963-5

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