Adjusting to the New Normal: River Flood Risk and the Real Estate Market
This paper investigates changes in flood risk perceptions following a river flood, focusing on regional differences. We combine federal flood risk maps, satellite images of the Western European flood in 2021, and data from a German online real estate portal to estimate changes employing a difference-in-differences approach with a hedonic property pricing model. This approach enables us to offer comprehensive nationwide insights into responses to fluvial flooding, while distinctly excluding direct flood-induced damages. We show that the effects are heterogeneous across space, depending on the distance to the flood and regional belief in climate change. While flood prone areas in proximity to the flood or with higher climate change beliefs experience housing price declines, we observe no statistically significant effects in other flood risk zones or, on average, across the country. Our results emphasize that fluvial flood risk discounts in the housing market will not adjust uniformly, even when floods become more frequent due to climate change.
United States Association for Energy Economics (USAEE)
JEL-Klassifikation: Q54, Q51, D81, R31
DOI: 10.2139/ssrn.4591894