Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/240427 
Year of Publication: 
2020
Series/Report no.: 
WWZ Working Paper No. 2020/18
Publisher: 
University of Basel, Center of Business and Economics (WWZ), Basel
Abstract: 
We investigate the effect of multiple flood events on property prices in Zurich canton of Switzerland. By merging property transaction data with records from universal and mandatory building insurance, we are able to identify the effect of the informational content of floods separately from the damage caused. Our rich data allows us to control for a wide range of housing characteristics, thus reducing the bias from unobserved heterogeneity that routinely plagues hedonic regressions. We find that houses located in flood hazard zones sell at a discount relative to houses located outside, despite the presence of mandatory insurance that covers most (but not all) costs. Providing flood hazard information increases the value of houses that are assigned a low risk. Last, we look at the effect of floods on property prices and find that in the aftermath of flood events, properties that narrowly escaped damage were sold at a significant discount relative to houses located out of harm's way. This pure information effect decays shortly.
Subjects: 
Flood risk
hedonic pricing
amenity value
availability bias
spatial hedonic model
JEL: 
Q51
Q54
R21
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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