Beyond the Floodplain: Uncovering the Spatial Spillovers of Land Price Declines after Typhoon Hagibis

We examine how changes in flood-risk perception influence land prices by analyzing price developments in inundated and nearby areas following Typhoon Hagibis (2019), using parcel-level data, inundation maps, and an event-study approach. Our key findings indicate that land prices in inundated areas declined monotonically after the flood, falling 10% after five years. Furthermore, a distance-decay effect is observed, with non-inundated plots within 100 meters of the flood boundary declining by 5%, whereas effects disappear beyond 800 meters. Price declines differ inside and outside official hazard zones, with larger spillover effects in unaffected areas outside the zones. To clarify the mechanism, we extend the Bayesian belief-updating framework of Bakkensen and Barrage (2022) to account for variations in flood-risk perception arising from temporal lags, proximity to the affected area, and hazard-zone designation. Simulation results based on the model show that three factors explain price changes: delayed adjustment of risk perceptions after the flood, reduced impact of flood risk perceptions with distance from the disaster area, and pre-flood incorporation of flood risk into prices within hazard map zones.