Soil moisture anomalies lead seasonal hydropower operator valuation stress

Abstract Hydropower output depends on basin storage and reservoir operation. Climate finance studies rely primarily on firm-level scores, while the relationship between basin-scale hydrometeorological variables and the market valuation of hydropower operators is rarely tested. We screen Earth observation hydroclimate anomalies upstream of the Longtan Hydropower Station against its operator’s market-adjusted valuation over 2020 to 2026. Root-zone soil-moisture anomalies are associated with forward 20-day valuation stress, an idiosyncratic volatility measure, about 4.5 months later (Spearman ρ = 0.41 at a 90-trading-day lead, false discovery rate q = 0.012). Annualized, this volatility averages about 18% after anomalies in the driest quintile and 30% after the wettest. The association persists with all other basin variables held fixed and under a non-linear dependence measure. No precipitation association survives false discovery rate control. Basin storage indicators from satellite and reanalysis products are candidates for seasonal hydropower climate risk screening.