Journal of Financial Stability· 2026Q1
Floods and firms: Vulnerabilities and resilience to natural disasters in Europe
- 76citations
- Q1SCImago
- 2026year
Short summary
Floods significantly and persistently reduce European manufacturing firms' performance and survival, with total assets declining by 2% one year after an event and up to 5% seven years later.
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Key points
- Floods reduce European manufacturing firms' total assets by 2% one year post-event and up to 5% seven years later.
- Persistent negative effects on firm performance and survival are observed.
- Repeated flooding has less severe impacts, suggesting adaptation measures are implemented.
- Economic activity reallocation within flooded regions helps explain these findings.
AI-generated from the title and abstract; the full text is not read.
Abstract
Combining a rich database on natural hazards, granular flood hazard maps and detailed information on firm geolocalization, we study the dynamic effects of floods on European manufacturing firms over the period 2007-2018. We find that water damages significantly and persistently worsen firms’ performance, and may endanger their survival. An average flood deteriorates total assets by about 2% in the year after the event, and up to 5% seven years out. Repeated flooding has milder impacts, suggesting that adaptation measures are adopted in flood-prone areas. We show how reallocation of economic activity within flooded regions can reconcile our results with the “creative destruction” hypothesis for natural disasters.
The authors' abstract, as published at the source. Journal of Financial Stability, 2026 · DOI ↗
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Field: Sociology and Political Science
Sociology and Political ScienceSocial SciencesGlobal and Planetary Change