The results show that rents tend to be lower in areas exposed to flood risk in three of the four cities. The relationship between job density and rents is less clear, which is most likely a result of the nature of city shape and the role of informal job markets. However, job density seems to play a role in the household decision to settle in high risk areas.

Overall, the study indicates that the drivers of rents in cities in SSA are still poorly understood and that lack of data is the main barrier to a better understanding. This analysis shows that household surveys that include rent or housing costs, housing characteristics, access to public services, tenure arrangements, and household experiences with flooding or other natural hazards are an important source of information in developing countries to value the willingness to pay to avoid hazard risk, and thus, the benefits associated to risk reduction investments. In housing markets with no or limited access to information about flooding risks, surveys with information on the experience of households with flooding and their expectation of future floods capture better the internalization of flooding risks by households than modeled flood maps.

The remainder of the paper is organized as follows. Section 2 provides a general overview of the flood and vulnerability contexts in the cities studied. Section 3 introduces the data and the empirical estimation strategy. Section 4 presents the empirical results. Section 5 concludes the paper.

# **2 Urbanization and vulnerability to floods in four Sub-Saharan African cities**

Urbanization is associated with development, higher incomes, better access to employment, better public services, and better access to information. However, if the urbanization growth rate exceeds the rate of development, or is accompanied by poor quality institutions, urbanization can increase population inequality. This results in poorer people being more exposed to poor infrastructure, low quality housing, and natural hazards. In particular, some urban conditions such as high population and asset densities, unplanned settlements, low quality drainage systems, unimproved solid waste management, poor housing conditions, and certain kinds of locations (coastal areas, lowland, near to rivers) increase the risk of exposure to natural hazards.

The share of Africans living in urban areas is projected to grow from 42 percent in 2018 to 59 percent in 2050 (UN, 2019). This share is the lowest among world regions. However, after 2020 the urbanization growth rate in Africa is likely to be the highest in the world, overtaking rates in Asia. Among the countries studied, Ghana has the highest urban population rate (57 percent) and has experienced the highest urban population increase since the mid-1990s (+18 percentage points). It is expected that almost three-quarters of Ghana’s population will be urban in 2050. Madagascar and Tanzania have experienced similar urbanization rates, with urban population shares in 2020 of 38 percent and 35 percent respectively, expected to increase to 58 percent and 55 percent by 2050. Ethiopia has experienced a slower pace of urbanization and in 2020 had an urban population share of 22 percent although this is expected to almost double by 2050 (see Figure 1 and Table 1).

This paper studies the largest and most important cities in each country: Accra, Antananarivo, Dar es Salaam, and Addis Ababa. The cities make up between 15 (Accra) and 31 percent (Antananarivo) of each country’s urban population (Table 1).

4