The next working group meeting on "Transport, Energy and Climate Economics" will take on Wednesday, 20 November from 12.15pm to 1.30pm.
Speaker : Ilya Eryzhenskiy - Institut des Politiques Publiques
Paper : Droughts and housing: past impact and future risk estimates from French credit data
Abstract : Among all extreme weather events in France, most additional climate-related damage in 2020-2050 is expected from droughts. It is largely due to shrink-swell of clay soils that deforms buildings with superficial foundations. Using administrative credit data, I estimate the shrink-swell impact for 2012-2021 and banks’ response to the additional damage anticipated within the next decades. Impact is estimated using renovation loan data and an event study methodology, where the event is a declaration of a state of drought and its intensity varies with the shrink-swell exposure of a given area. I show that renovation loan production of an average bank branch increases by 55% when shrink-swell hits all municipalities of an agglomeration. I then calculate the cumulative shrink-swell experience of a given bank’s branch network, to quantify differences in information on the damages. I relate this measure to characteristics of home purchase loans in areas where shrink-swell has not happened in the past decades, but is expected in the future.
Loans of banks with more shrink-swell experience tend to be substantially larger and carry a modest additional non-interest fee, while the interest and duration of loans is not affected.
Relevant information :
- Our sessions are held online, here the Teams link for this session.
- The Transport, Energy, and Climate Economics Working Group (TrEnCE) is organized by the Governance & Regulation Chair at the University Paris Dauphine-PSL. Usually, the working group usually organizes a weekly presentation every Wednesday afternoon (12:15-1.30pm CET) within topics under the umbrella fields of transport, climate, environment and energy economics.
- To subscribe to our mailing list or to volunteer as a future presenter, you can write to the coordinator, Shahmeer Mohsin : shahmeer.mohsin@dauphine.psl.eu.
