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Staying afloat: the impact of flooding on UK firms

Author

Listed:
  • Benjamin Crampton

    (Bank of England)

  • Rupert-Hu Gilman

    (Bank of England)

  • Rebecca Mari

    (Bank of England)

Abstract

This paper examines the exposure of UK firms to flood risk and the impact that past floods have had on corporate outcomes. Through the use of a novel data set that combines highly granular business premise information with flood maps and financial records, we first identify the specific regions, sectors and characteristics of firms where flood risk is most concentrated. Firm-level exposure is significantly influenced by sorting dynamics, with larger premises being more at risk. Second, we demonstrate that flood impacts are highly damaging to firms: they significantly increase the likelihood of business termination for small and medium-sized firms; for surviving firms, there are large negative impacts to revenue, employment, and total assets, with large firms and those in natural resource-related sectors being most affected.

Suggested Citation

  • Benjamin Crampton & Rupert-Hu Gilman & Rebecca Mari, 2026. "Staying afloat: the impact of flooding on UK firms," Bank of England Staff Working Paper series 1187, Bank of England.
    • Handle: RePEc:boe:boeewp:023309
    as

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    File URL: https://www.bankofengland.co.uk/-/media/boe/files/working-paper/2026/staying-afloat-the-impact-of-flooding-on-uk-firms.pdf
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    References listed on IDEAS

    as
    1. Mathews, Shilpita & Surminski, Swenja & Roezer, Viktor, 2021. "The risk of corporate lock-in to future physical climate risks: the case of flood risk in England and Wales," LSE Research Online Documents on Economics 112801, London School of Economics and Political Science, LSE Library.
    2. Elco E. Koks & Mark Thissen, 2016. "A Multiregional Impact Assessment Model for disaster analysis," Economic Systems Research, Taylor & Francis Journals, vol. 28(4), pages 429-449, October.
    3. Nicola Garbarino & Benjamin Guin & Jonathan Lee, 2022. "The Effects of Subsidized Flood Insurance on Real Estate Markets," Bank of England Staff Working Paper series 995, Bank of England.
    4. W J Wouter Botzen & Olivier Deschenes & Mark Sanders, 2019. "The Economic Impacts of Natural Disasters: A Review of Models and Empirical Studies," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 13(2), pages 167-188.
    5. Patrick Doupe & Leo Dobes & Frank Jotzo, 2019. "Improving Understanding of Flood Risk: the Effects of Lowering the Cost of Accessing Flood Risk Information," Economics of Disasters and Climate Change, Springer, vol. 3(2), pages 101-117, July.
    6. Ajita Atreya & Susana Ferreira & Warren Kriesel, 2013. "Forgetting the Flood? An Analysis of the Flood Risk Discount over Time," Land Economics, University of Wisconsin Press, vol. 89(4), pages 577-596.
    7. Chris Eves & Sara Wilkinson, 2014. "Assessing the immediate and short-term impact of flooding on residential property participant behaviour," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 71(3), pages 1519-1536, April.
    8. Mathews, Shilpita & Surminski, Swenja & Roezer, Viktor, 2021. "The risk of corporate lock-in to future physical climate risks: the case of flood risk in England and Wales," LSE Research Online Documents on Economics 112807, London School of Economics and Political Science, LSE Library.
    9. B. Tellman & J. A. Sullivan & C. Kuhn & A. J. Kettner & C. S. Doyle & G. R. Brakenridge & T. A. Erickson & D. A. Slayback, 2021. "Satellite imaging reveals increased proportion of population exposed to floods," Nature, Nature, vol. 596(7870), pages 80-86, August.
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    Keywords

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    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production

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