When climate risks become evident: A natural experiment on risk perceptions in the housing market

This paper examines how a rare and catastrophic quick-clay landslide in Eastern Norway affected housing market outcomes by making previously underappreciated climate-related risks more salient. The authors use the 2020 Gjerdrum quick-clay landslide as a natural experiment, combining detailed property transaction data from Eastern Norway with a two-way fixed effects difference-in-differences design and boundary-based comparisons of properties located near mapped hazard zones. 

Authors find that properties exposed to quick-clay risk experienced statistically significant price declines of about 1–1.5 per cent relative to non-exposed properties, with larger effects in some regions and effects extending beyond the directly affected municipality. Event-study estimates show that the response was temporary and concentrated in the first two years after the landslide, reflecting a short-lived adjustment in risk perceptions. The study finds little indication of effects on transaction volumes, but new residential development in quick-clay risk zones appears to fall by roughly 12 per cent. The authors conclude that even a highly visible fatal disaster produces a measurable but limited and temporary housing market response.