|P301, Université Paris-Dauphine|
"Flood risk information: Evidence from Paris Housing Markets"
Climate change will involve a higher frequency of extreme events, such as storms, droughts and floods. But to what extent do individuals perceive this risk? Drawing on very rich, disaggregated data on property transactions and geolocalised amenities from suburban Paris over the period 2003 to 2012, we exploit the different dates of implementation of flood risk zone regulation (PPRi) using an identification strategy based on a difference-in-differences specification. The results show that home prices for similar real estate are 3 to 7% lower following information release when located in a flood risk zone, depending on the submarket (flats or houses). We also study the persistence of the effects, and their determinants. We find that real estate buyers are receptive to the information, with a higher discount the higher is the flood risk designated by the regulation. Buyers with previous exposure to floods in their municipality of origin display a weaker response to the information release.