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Many of our seminars and public events this year will continue as in person or as hybrid (online and in person) events.

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Unless otherwise specified, in-person seminars are open to the public. Please ensure you have informed the event contact as early as possible.

Those unable to join the seminars in-person are welcome to participate via zoom if the event is hybrid.

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About this event

Agglomeration is an important source of urban productivity. While it generates benefits that allow firms to grow, little is known about what happens when spatial concentration exposes many firms to the same environmental shock. We study this tension in Kampala, Uganda, where commercial activity is concentrated in low-lying areas subject to recurrent flash flooding. Colonial planning and transport infrastructure helped establish a commercial core that persists despite the decline of rail transport and recurrent flooding. Combining ten years of administrative tax records, a geocoded establishment census, smartphone mobility records, and an original survey of 501 firm owners, we show that firms are disproportionately concentrated in flood-prone areas with dense customer activity. This pattern is not explained by compensating rent discounts or limited knowledge of flood risk: commercial rents are no lower in more exposed areas, and surveyed owners accurately rank relative flood risk across Kampala. Smartphone activity and survey responses instead point to customer access as an important attraction. We then compare firms in higher- and lower-risk areas around recurrent extreme-rainfall events. Heterogeneity-robust difference-in-differences estimates show that quarterly sales fall among young firms and firms with low initial sales rank. A distributed-lag model also shows an increase in exit among these firms. These findings document how recurrent flooding affects vulnerable firms within an established urban agglomeration.