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The impact of flood risk on real estate wealth in Italy

Author

Listed:
  • Michele Loberto

    (Bank of Italy)

  • Matteo Spuri

    (Bank of Italy)

Abstract

This paper outlines the main data sources and the methodology used to estimate the impact of flood risk in Italy. It assesses the potential physical damage to the housing stock, identifying the main gaps in the current information set. Estimates of exposure and expected annual loss vary greatly depending on the hazard scenarios used, the assumptions about building vulnerability, and the data’s spatial granularity level. Based on our most reliable estimates, the value of homes potentially exposed to flooding is close to €1 trillion (2020 values), about a quarter of the total housing wealth. The resulting expected annual loss can be estimated at around €3 billion.

Suggested Citation

  • Michele Loberto & Matteo Spuri, 2023. "The impact of flood risk on real estate wealth in Italy," Questioni di Economia e Finanza (Occasional Papers) 768, Bank of Italy, Economic Research and International Relations Area.
    • Handle: RePEc:bdi:opques:qef_768_23
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    File URL: https://www.bancaditalia.it/pubblicazioni/qef/2023-0768/QEF_768_23.pdf
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    References listed on IDEAS

    as
    1. Matteo Benetton & Simone Emiliozzi & Elisa Guglielminetti & Michele Loberto & Alessandro Mistretta, 2022. "Do house prices reflect climate change adaptation? Evidence from the city on the water," Questioni di Economia e Finanza (Occasional Papers) 735, Bank of Italy, Economic Research and International Relations Area.
    2. Riccardo De Bonis & Danilo Liberati & John Muellbauer & Concetta Rondinelli, 2020. "Consumption and wealth: new evidence from Italy," Temi di discussione (Economic working papers) 1304, Bank of Italy, Economic Research and International Relations Area.
    3. Jan Huizinga & Hans de Moel & Wojciech Szewczyk, 2017. "Global flood depth-damage functions: Methodology and the database with guidelines," JRC Research Reports JRC105688, Joint Research Centre.
    4. Ivan Faiella & Filippo Natoli, 2018. "Natural catastrophes and bank lending: the case of flood risk in Italy," Questioni di Economia e Finanza (Occasional Papers) 457, Bank of Italy, Economic Research and International Relations Area.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Michele Loberto & Alessandro Mistretta & Matteo Spuri, 2023. "The capitalization of energy labels into house prices. Evidence from Italy," Questioni di Economia e Finanza (Occasional Papers) 818, Bank of Italy, Economic Research and International Relations Area.

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    More about this item

    Keywords

    climate change; real estate; flooding risk;
    All these keywords.

    JEL classification:

    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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