Recently, there is a growing interest in understanding how individuals adapt to changing climate
conditions and climate-induced extreme weather events. An underexplored question is whether and
how climate-related natural hazards affect household saving behavior. For this purpose, we exploit a
natural experiment stemming from the European Flood of August 2002. Combining micro data with
geo-coded flood maps allows us to analyze the causal impact of flood exposure on household savings
within a differences-in-differences setting. We find that flood exposure depresses household saving
behavior in the medium run. A likely explanation is moral hazard induced by massive government
support for affected households.