DO FLOODS HAVE PERMANENT EFFECTS? EVIDENCE FROM THE NETHERLANDS

Authors


  • We are grateful to two anonymous reviewers and JRS co-editor Mark Partridge for very useful and constructive comments. Financial support from Kennis Voor Klimaat is gratefully acknowledged. At the time the paper was written Martijn Dröes was employed at TNO, Built Environment and Geosciences. The usual disclaimer applies.

ABSTRACT

This study investigates the short- and long-run impact on population dynamics of the major flood in the Netherlands in 1953. A dynamic difference-in-differences analysis reveals that the flood had an immediate negative impact on population growth, but limited long-term effects. In contrast, the resulting flood protection program (Deltaworks), had a persisting positive effect on population growth. As a result, there has been an increase in population in flood-prone areas. Our results suggest a moral hazard effect of flood mitigation leading to more people locating in flood-prone areas, increasing potential disaster costs.

Ancillary