Cloudbursts and Capitalization

Abstract

in Sweden using a difference-in-differences design applied to the 2021 Gävleborg and 2014 Malmö cloudbursts. Flood exposure is defined by combining blue spot flood risk polygons with gridded rainfall data, and causal effects are estimated using two-way fixed effects models with DeSO-area and year-week fixed effects. The 2021 Gävleborg cloudburst is associated with an approximate 4.6 percent decrease in sale prices for flood-exposed single-family homes (p = 0.081). The 2014 Malmö result shows an approximate 6.2 percent increase (p = 0.042) but is difficult to interpret causally, possibly reflecting localised neighbourhood appreciation during the 2014 to 2015 Swedish housing market boom rather than a causal flood effect. A pooled model combining both events produces a statistically non-significant estimate, consistent with the opposing event specific directions. The findings suggest that Swedish housing markets do respond to pluvial flood events, though the moderate effect size is consistent with universal home insurance coverage reducing buyers’ direct financial exposure to flood damage.