I investigate how housing markets adjust to realized flood events within the floodplain. Using nearly two decades of transaction-level data from Seoul, South Korea. I document that floods lead to delayed and gradual declines in housing prices: lease prices fall within two years of the event, while sales prices decline only after five years. Transaction volumes contract immediately in the lease market and after a lag in the sales market, indicating that market activity responds quickly even though prices adjust slowly. The empirical findings are inconsistent with pure informational frictions and are better explained by seller-side behavioral frictions: homeowners anchored to nominal purchase prices delay sales, thereby delaying price adjustment. The results show that reference-dependent behavior can shape the way how housing markets incorporate climate risk.

We study the international spillover effects of air pollution by developing a framework that integrates recent advances in atmospheric science into econometric estimation with microdata on mortality and health. Combining transboundary particle trajectory data with the universe of individual-level mortality and emergency room visit data in South Korea, we find that transboundary air pollution from China significantly increases mortality and morbidity in South Korea. Using these estimates, we show that a recent Chinese environmental policy “war on pollution” generated a substantial international spillover benefit. Finally, we examine China’s strategic pollution reductions and provide their implications for the potential Coasian bargaining.