No. 735 - Do house prices reflect climate change adaptation? Evidence from the city on the water

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by Matteo Benetton, Simone Emiliozzi, Elisa Guglielminetti, Michele Loberto and Alessandro MistrettaNovember 2022

This paper studies the effects of public policies for adaptation to climate change by analysing the case of Venice, where a sea wall came into operation in 2020. Our econometric analysis assesses the benefits of the sea wall in terms of the values of residential properties, based on their exposure to the risk of flooding.

It is estimated that the sea wall increased house prices by 7 percent for the property on the ground floor compared with those on upper floors in the lower-lying areas of the city. The latter, in turn, appreciated by 3 per cent compared with those located in the higher-ground areas. Overall, the operation of the sea wall determined an increase in the value of residential properties in Venice of 4.5 per cent in the first year.