Abstract

In developing country cities, poor households often reside in unattractive locations, including flood-prone areas. This can be due to poor information about flood risks or acceptance of these risks in the face of lower housing prices. Poor households are also more vulnerable to floods than richer households given the low-quality housing they occupy. Does information on flood risks help households make better location and housing choices? To what extent will these choices be revised with increased flood risks from climate change?  To answer these questions, we develop a polycentric urban economics model with heterogenous income groups, formal and informal housing, and flood risks. The model is calibrated to Cape Town and simulations are run to assess the impact of flood risks on land values and income segregation within the city, distinguishing between the effects of three types of floods (fluvial, pluvial, and coastal).  Although total damages from floods are greater for rich households, they represent a larger relative share of poor households’ incomes. Better information and climate change encourage the relocation of households outside flood-prone zones, but the poor have more inertia due to more stringent financial constraints.

Biography

Harris Selod is a Senior Economist in the Sustainability and Infrastructure Team of the Development Research Group at the World Bank. His current research focuses on urban development, including issues related to transport and land use, as well as land tenure, land markets and the political economy of the land sector in developing countries, with a specific interest in West Africa. His publications cover a variety of topics in urban and public economics including theories of squatting and residential informality, the political economy of transport infrastructure, the effects of residential segregation on schooling and unemployment, or the impact of land rights formalization and place-based policies.

His research interests are: Urban development, land use, land markets, transport and mobility.