Fiscal Cost of Urban Flood Risk: An Analysis of Hedonic Property Prices and Zonal Revenue Base in Mumbai

Abstract

This paper deals with the fiscal cost of climate induced urban flooding. A hedonic analysis of the sales price of around 900 residential properties, transacted from 2015 to 2019, reveals that flood risk lowers the mean sales price of residential homes by a margin of 12.6% to 15%. An analysis of officially defined zonal Annual Statement Rates (ASR), which is the common revenue base for two important taxes levied by state and local Government, is analysed for around 735 revenue zones of Greater Mumbai for the period 2003 to 2023. It suggests robust and distribution-sensitive effects of flood risk on property values. Findings of the paper underscore the need for land-based revenue options and the formulation of appropriate adaptation strategies.