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Assessing the housing price capitalization of non-destructive flooding events

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  • Livy, Mitchell R.

Abstract

Flooding poses significant costs to communities and is expected to vary in intensity and severity in the future. Previous research has shown that major flooding events significantly affect housing markets; however, perceptions of non-destructive flooding events have not been adequately studied. In this paper, I examine the housing price capitalization of elevated river levels that did not reach the major flood stage to measure their influence on flooding risk perceptions. Estimates from a property fixed effects hedonic model provide evidence that housing prices respond heterogeneously to non-destructive flooding, with a negative and significant effect in the 100 year floodplain, but not the 500 year floodplain or other areas. These results show that a major event is not necessary for residents to update their beliefs and can inform future extreme natural event policy.

Suggested Citation

  • Livy, Mitchell R., 2023. "Assessing the housing price capitalization of non-destructive flooding events," Research in Economics, Elsevier, vol. 77(2), pages 265-274.
    • Handle: RePEc:eee:reecon:v:77:y:2023:i:2:p:265-274
    DOI: 10.1016/j.rie.2022.10.003
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    More about this item

    Keywords

    Flooding; Housing; Extreme natural events;
    All these keywords.

    JEL classification:

    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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