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Peer-reviewedCC BYJournal of Financial Stability

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

  • Serena Fatica1
  • Gabor Katay2
  • Michela Rancan3
  1. 1European Commission – Joint Research Centre, and MoFiR, Via E. Fermi, Ispra, 21027, Italy
  2. 2European Commission, Rue de la Loi, Brussels, 1049, Belgium
  3. 3University of Milan, via Conservatorio, Milan, 20122, Italy
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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.

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Cite

BibTeXRIS
BibTeX
@article{fatica2026floods,
  title = {{Floods and firms: Vulnerabilities and resilience to natural disasters in Europe}},
  author = {Serena Fatica and Gabor Katay and Michela Rancan},
  journal = {Journal of Financial Stability},
  year = {2026},
  month = jun,
  doi = {10.1016/j.jfs.2026.101566},
  url = {https://doi.org/10.1016/j.jfs.2026.101566},
  note = {CC BY},
}
RIS
TY  - JOUR
TI  - Floods and firms: Vulnerabilities and resilience to natural disasters in Europe
AU  - Serena Fatica
AU  - Gabor Katay
AU  - Michela Rancan
PY  - 2026
DA  - 2026/06/25
JO  - Journal of Financial Stability
DO  - 10.1016/j.jfs.2026.101566
UR  - https://doi.org/10.1016/j.jfs.2026.101566
AB  - 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.
SN  - 1572-3089
SN  - 1878-0962
ER  -