A neglected climate risk: The price effect of urban waterlogging.

With global warming, cities are vulnerable to extreme weather, increasing the climate risk to cities worldwide. Although existing literature has examined the ex-post impacts of extreme weather, it is less clear how climate risk affects cites before extreme weather occur. To lower the risk of urban waterlogging, which is caused by extreme weather, and improve the ability of cities to adapt to extreme weather, China launched the Sponge City Project (SCP) in 2013 to manage the urban stormwater and waterlogging. Adopting the SCP pilot in China as a quasi-natural experiment, we examine the impact of the climate risk caused by urban stormwater and waterlogging on the house price with the difference-in-differences (DID) method. We find that after implementing the SCP pilot program, the house price in pilot cities increased significantly because of the improvement in cities' resilience to climate risk. Additionally, this effect was only demonstrated in cities with a high waterlogging risk. For SCP pilot cities with lower waterlogging risk, the house price is not significantly affected by SCP implementation. This indicates that the house price in China is sensitive to the climate risk caused by the urban stormwater and waterlogging. Our findings also contribute to the understanding of the significance of the climate risk management, and provided theoretical evidence for urban governance.