Does Climate Change Adaptation Matter? Evidence from the City on the Water | 국외연구자료

KDI 경제교육·정보센터

Economic Information and Education Center

최신자료

Does Climate Change Adaptation Matter? Evidence from the City on the Water

CEPR

2024.11.26

This paper leverages the unexpected successful activation of a sea wall built to protect Venice from rising tides to estimate the capitalization into property values of public investment in resilience infrastructure. Using a difference-in-differences hedonic approach with high-frequency microdata on residential and commercial properties, we show that properties above the sea wall activation threshold experience a permanent reduction in flood risk and expected damages, reflected in higher prices. To account for city-wide effects and potential ex-post government bailouts, we analyze the effect of the second-largest flood in Venice centuries-long history on properties prices relative to the mainland as well as data on government claims matched with property elevations. Our findings indicate that capitalized benefits and projected government savings cover approximately 52% (101%) of the sea wall costs in a status-quo (sea-level-rise) scenario. Lastly, we calculate a break-even discount rate of 1.1%, which increases to to 2.5% under sea-level-rise projections.

목록보기