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Companies in the hardest-hit municipalities saw sales rise 7.4% in Q1 of 2025, but Paiporta and 7 other towns have yet to recover their pre-DANA turnover

Ivie has released a new IvieLAB report on the impact of the DANA in Valencia, highlighting the significant differences among affected towns and urgent need for localized support measures

The Ivie has just published a new IvieLAB report on the economic impact of the DANA* on sales and employment, through ERTE (temporary layoffs), in companies located in the area affected by the floods. The document, prepared by Joaquín Maudos, Ivie Research Deputy Director and Professor of Economics at the University of Valencia and Ivie economist Carlos Gómez, highlights the significant differences between the towns affected by the DANA and emphasizes the need to continue monitoring developments in the most severely impacted municipalities to implement localized support measures.

The impact on company turnover and the subsequent recovery from the effects of the DANA vary significantly depending on location, size, and sector. Across all municipalities affected by the floods, companies recorded a 3% increase in sales in the fourth quarter of 2024 compared to the same quarter of the previous year, and a 6.1% increase in the first quarter of 2025. However, in the 28 most affected municipalities (classified as emergency level 2), growth in the last quarter of 2024 was only 0.3%, while recovery was stronger in the first quarter of 2025,  with average sales rising by 7.4% compared to the same period in 2024.

These large positive figures mask significant differences in municipalities where companies have not yet recovered their sales. This is the case of businesses in Paiporta, which, after seeing their sales fall by 17.7% in the fourth quarter of 2024 (compared to the same quarter in 2023), lost another 5.2% in the first quarter of this year. Godelleta experienced similar losses, with a drop of 22% and 5.2% in both quarters, respectively, and Sot de Chera saw even sharper declines of 13.6% and 34.6%. Although less pronounced, businesses in Algemesí saw their turnover fall by 9.8% and 1.5% in the two quarters, respectively. Aldaia also recorded notable declines of 2.9% and 0.8%. Montroi, Alfafar, and Llocnou de la Corona complete the list of the eight municipalities among the 28 most affected whose companies recorded a drop in sales in the recovery quarter.

Among the remaining 75 municipalities affected by the floods (classified as emergency level 1), overall sales by companies in these areas increased by 4.2% in the quarter affected by the storm and by 5.4% in the first quarter of 2025. However, there are also towns that have not been able to recover their sales. In total, there are 12 municipalities that have experienced declines in the two quarters analyzed. In nine of them, the decline exceeded 5%: Alborache, Alcàsser, Almussafes, Aras de los Olmos, Chera, Gavarda, Manuel, Polinya de Xuquer and Tous.

The report Evaluación económica del impacto de la dana en los municipios afectados: impacto en ventas y en ERTE (Economic assessment of the impact of the DANA in Valencia on the affected municipalities: impact on sales and temporary layoffs [ERTE]) analyzes data by company size and sector. Data reveals that small companies (with annual turnover under €6 million) were more severely affected than large ones. In the case of municipalities in ground zero (15 in total), small businesses saw a 10% drop in sales in the last quarter of 2024, while larger companies saw their sales increase by 2.4%. Thus, the DANA offers further evidence of the greater resilience exhibited by large firms in the face of adverse shocks.

In terms of sector analysis, based on companies paying business tax on economic activities (representing 98.5% of the total), we can see how most sectors managed to increase their sales in 2025 after the initial impact at the end of 2024. However, at ground zero areas, two sectors failed to reverse the trend: industry, which suffered a drop in sales of more than 6% in the last quarter of 2024 and a further drop of 0.6% in the first quarter of 2025, and transport and communications, with an initial drop of 9.7% and 6.5% in the first quarter of this year.

Employment inequalities in the use of ERTEs (temporary employment regulation files)

The role of ERTEs or temporary layoffs in maintaining employment in the municipalities affected by the floods was crucial, as was the case during the COVID-19 pandemic, according to the authors of the study.

However, the application of this mechanism varied significantly across areas analyzed. Most of the workers affected by the floods entered the temporary layoff schemes during the last days of October and throughout the months of November and December of 2024, with few additional cases continuing afterwards. As of 5 August 2025, a total of 33,042 workers were temporarily laid off. In ground zero municipalities, almost 17% of workers registered with Spain’s Social Security system in October 2024 were affected by a temporary layoff (ERTE), compared to only 2% of workers across all affected municipalities.

The manufacturing industry was among the most affected across all municipalities. Specifically, in ground zero, 17.7% of manufacturing workers were placed on ERTE. In these 15 municipalities classified as ground zero, the sectors that made the greatest use of temporary layoffs were hospitality (43.2%), artistic activities (35.7%), real estate (20.5%), other services (20.1%), and commerce (19.7%).

As of 5 August 2025 (latest available data), 3,489 workers remained on ERTE, representing 10.6% of all those who had entered the scheme since the floods. Municipalities classified as emergency level 1 experienced sharp declines, with only 966 people still on ERTE as of that date, most of them in the other services sector. In emergency level 2 municipalities, the figure was 2,523. In the case of l’Horta Sud, 1,833 workers remained on ERTE, while in ground zero municipalities the number was 1,780, mainly in manufacturing and commerce.

The report calls for targeted aid to sectors and business where workers remain in ERTE situations and turnover has not yet returned to pre-crisis levels. It also recommends focusing public efforts on recovering capital in the affected areas, warning that failure to do so undermine their economic growth potential.

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* In Spain, a DANA (Depresión Aislada en Niveles Altos) refers to an isolated high-altitude low-pressure system that can cause intense rainfall and flooding, particularly in Mediterranean regions. This report focuses specifically on the DANA that struck Valencia and surrounding municipalities on 29 October 2024, resulting in severe floods and widespread economic disruption.