Floods and firms: vulnerabilities and resilience to natural disasters in Europe

Serena Fatica, Gábor Kátay and Michela Rancan

No 2022-13, JRC Working Papers in Economics and Finance from Joint Research Centre, European Commission

Abstract: Combining a rich database on natural hazards, granular flood risk maps and detailed information on firm geolocalisation, we study the dynamic impacts of floods on European manufacturing firms during the period 2007-2018. We find that water damages significantly and persistently worsen firm performance, and may endanger their survival. An average flood deteriorates total assets by about 2% in the year after the event, and up to 5% seven years out. The drop in sales and employment is comparable. We show how reallocation of economic activity within flooded regions can reconcile our results with the 'creative destruction' hypothesis proposed by the natural disaster literature.

Keywords: natural disasters; floods; climate risk; firm performance; panel local projections (search for similar items in EconPapers)
JEL-codes: D22 Q54 R11 (search for similar items in EconPapers)
Pages: 50 pages
Date: 2022-12
New Economics Papers: this item is included in nep-eec, nep-env, nep-sbm and nep-ure
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Citations: View citations in EconPapers (5)

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