Living with the memory of disaster: Flood exposure and persistent well-being losses

The number of people exposed to flooding is increasing worldwide, yet little is known about whether and why its effects on well-being persist long after physical reconstruction and recovery. This paper examines the long-term well-being consequences of the July 2021 floods in Germany by combining longitudinal data with geo-spatial flood maps. I find evidence that flood exposure leads to persistent reductions in subjective well-being that do not fully recover over time. The estimated effects are substantially larger among individuals residing in severely flood-affected districts, where the well-being decline is more than three times larger than the corresponding effect estimated for all flood-exposed districts. I further examine a broad range of dimensions, and I find no evidence that flood exposure affected income, employment, or wages, suggesting that conventional economic outcomes are unlikely to account for the persistent decline in subjective well-being. Instead, flood exposure is associated with persistent increases in environmental protection concerns, climate change anxieties, higher housing repair costs and concerns about personal finances. These findings suggest that the long-term welfare costs of climate-related disasters extend beyond traditional economic measures and highlight the importance of accounting for their broader consequences when designing disaster recovery and climate adaptation policies.