Estimating the causal effect of extreme flooding on urban property markets: A case study of Porto Alegre, Brazil

The May 2024 floods in Porto Alegre, Brazil, triggered a pronounced spatial repricing of climate risk in the city’s housing market. Using a Bayesian structural time-series framework, we estimate an average causal impact of a 4.7% increase in sale prices and a 9.1% increase in rental price indices, driven primarily by price appreciation in elevated, flood-resilient neighborhoods. Our econometric approach accounts for nonlinear trends and macroeconomic controls, isolating the causal effect of the disaster. The findings highlight how climate shocks can exacerbate socio-spatial inequality, reshape urban investment patterns, and embed climate resilience into property valuations.