Capitalizing flood risk protective measures in residential real estate

Abstract This study utilizes 1.4 million residential transactions incorporating flood hazard estimates derived from a nationwide elevation model and hydrological data to examine the role of flood protections to mitigate the negative impact of flood risk on home prices. We find that low‐rise homes in unprotected flood‐prone areas face a 3.5% price discount, whereas mid‐/high‐rise properties are unaffected. Postinstallation, homes near flood protections experience price increases of 10.7%, with no significant difference across home types. This premium mirrors the preprotection discount observed for the same homes. Robustness checks using manual flood risk assessments confirm our findings, offering valuable insights for various stakeholders.