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Floods and firms: Vulnerabilities and resilience to natural disasters in Europe

Serena Fatica¹; Gábor Kátay; Michela Rancan^2,3

¹ European Commission · ² Marche Polytechnic University · ³ University of Milan

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.

DOI

10.1016/j.jfs.2026.101566

Volume

85

Pages

101566

Language

en

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