Flood risk perception after indirect flooding experience: Null results in the German housing market

Nils aus dem Moore, Johannes Brehm, Philipp Breidenbach, Arijit Ghosh and Henri Gruhl

No 976, Ruhr Economic Papers from RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen

Abstract: The frequency and severity of fluvial floods are expected to increase due to climate change. This paper investigates whether flood risk perception in the housing market changes across a country after the occurrence of a catastrophic fluvial flood. Using a comprehensive geocoded German house price data set and official flood risk maps, we exploit the July 2021 fluvial flood that was salient across Germany as an exogenous variation to causally measure the flood risk valuation update in a difference-in-differences setup. While we find that house prices decreased in the most inundated regions, no price changes occurred in flood risk regions that were not directly affected. This finding indicates that people did not update their risk perception after indirect exposure. With this paper, we contribute to the understanding of the impact of a salient flood on flood risk capitalization in places without direct exposure.

Keywords: Flood risk; home prices; risk updating (search for similar items in EconPapers)
JEL-codes: D81 Q51 Q54 R31 (search for similar items in EconPapers)
Date: 2022
New Economics Papers: this item is included in nep-env, nep-eur and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:rwirep:976

DOI: 10.4419/96973141

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