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The impact on economic activity and housing market of the 2023 Emilia-Romagna floods

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  • Elena Gentili

    (Bank of Italy)

Abstract

In May 2023, two floods hit the Italian region of Emilia-Romagna, causing 17 deaths and €10 billion in damages. This paper investigates the impact of such floods on economic activity and household wealth. Using nightlight data to measure economic activity and considering a triple difference-in-differences empirical framework, we find a decline in nightlight activity in flooded municipalities in the three weeks surrounding the two floods, a rebound effect in the following three weeks, but no effect thereafter. In the most pessimistic scenario, the total reduction in regional GDP growth in 2023 is between 0.1 and 0.2 per cent, i.e. between €3 and 5 million, excluding the agricultural sector. The duration of the impact of the floods is broadly confirmed by the other two proxies for economic activity available at the daily frequence and municipal level, i.e. hiring and road traffic data. We also find temporary effects on the housing market demand, but no effects on the house prices asked by the sellers nor on the number of posted advertisements for house sales, suggesting that the housing market in flooded municipalities already discounts the risk of such natural events.

Suggested Citation

  • Elena Gentili, 2025. "The impact on economic activity and housing market of the 2023 Emilia-Romagna floods," Temi di discussione (Economic working papers) 1506, Bank of Italy, Economic Research and International Relations Area.
    • Handle: RePEc:bdi:wptemi:td_1506_25
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    File URL: https://www.bancaditalia.it/pubblicazioni/temi-discussione/2025/2025-1506/en_tema_1506.pdf
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    JEL classification:

    • C18 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Methodolical Issues: General
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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