Abstract
Flooding is one of the most common, widespread and destructive natural disasters and is expected to become more important in the future. To optimally design policies to reduce the negative welfare effects of such environmental disasters, it is crucial to understand how households react to flood events and value flood risk. The goal of this research is to study how mandatory information disclosure on flood risk may affect housing market outcomes and household behavior. Therefore, we contribute to the existing literature as we are able to exploit law changes in Flanders that impose mandatory information disclosure of flood risk in real estate listings since 2013. We use rich micro-data on the universe of house sales, rental contracts, building permits, flood risk maps and flood events. The policy changes and rich micro-data allow us to provide a credible causal estimate of housing market responses to the introduction of mandatory disclosure of flood risks.
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