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Flood Hazards, Insurance Rates, and Amenities: Evidence From the Coastal Housing Market

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  • Okmyung Bin
  • Jamie Brown Kruse
  • Craig E. Landry

Abstract

This study employs the hedonic property price method to examine the effects of flood hazard on coastal property values. We utilize Geographic Information System data on National Flood Insurance Program flood zones and residential property sales from Carteret County, North Carolina. Our results indicate that location within a flood zone lowers property value. Price differentials for flood risk and the capitalized value of flood insurance premiums are roughly equivalent-both exhibiting a nonlinear relationship in flood probability. Our results support the conclusion that flood zone designation and insurance premiums convey risk information to potential buyers in the coastal housing market. Copyright The Journal of Risk and Insurance, 2008.

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Bibliographic Info

Article provided by The American Risk and Insurance Association in its journal Journal of Risk & Insurance.

Volume (Year): 75 (2008)
Issue (Month): 1 ()
Pages: 63-82

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Handle: RePEc:bla:jrinsu:v:75:y:2008:i:1:p:63-82

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Cited by:
  1. Tsvetan Tsvetanov & Farhed Shah, 2013. "The economic value of delaying adaptation to sea-level rise: An application to coastal properties in Connecticut," Climatic Change, Springer, vol. 121(2), pages 177-193, November.
  2. Kousky, Carolyn & Walls, Margaret, 2013. "Floodplain Conservation as a Flood Mitigation Strategy: Examining Costs and Benefits," Discussion Papers dp-13-22, Resources For the Future.
  3. Alicia Rambaldi & Ryan McAllister & Kerry Collins & Cameron Fletcher, 2011. "Housing shadow prices in an inundation prone suburb," Discussion Papers Series 429, School of Economics, University of Queensland, Australia.
  4. Yoder, Jonathan K. & Ohler, Adrienne M. & Chouinard, Hayley H., 2014. "What floats your boat? Preference revelation from lotteries over complex goods," Journal of Environmental Economics and Management, Elsevier, vol. 67(3), pages 412-430.
  5. Samarasinghe, Oshadhi & Sharp, Basil M.H., 2008. "Flood prone risk and amenity values: a spatial hedonic analysis," 2008 Conference (52nd), February 5-8, 2008, Canberra, Australia 6013, Australian Agricultural and Resource Economics Society.
  6. Tsvetan G. Tsvetanov & Farhed A. Shah, 2012. "The Economics of Protection against Sea-Level Rise: An Application to Coastal Properties in Connecticut," Working Papers 10, University of Connecticut, Department of Agricultural and Resource Economics, Charles J. Zwick Center for Food and Resource Policy.
  7. Bin, Okmyung & Landry, Craig E., 2013. "Changes in implicit flood risk premiums: Empirical evidence from the housing market," Journal of Environmental Economics and Management, Elsevier, vol. 65(3), pages 361-376.
  8. Samarasinghe, Oshadhi & Sharp, Basil, 2010. "Flood prone risk and amenity values: a spatial hedonic analysis," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 54(4), December.
  9. Daniel Felsenstein & Michal Lichter, 2014. "Social and economic vulnerability of coastal communities to sea-level rise and extreme flooding," Natural Hazards, International Society for the Prevention and Mitigation of Natural Hazards, vol. 71(1), pages 463-491, March.
  10. Céline Grislain-Letrémy & Bertrand Villeneuve, 2011. "Natural and Industrial Disasters : Land Use and Insurance," Working Papers 2011-32, Centre de Recherche en Economie et Statistique.
  11. Jonathan K. Yoder & Adrienne M. Ohler & Hayley H. Chouinard, 2012. "What floats your boat? Preference revelation from lotteries over complex goods," Working Papers 2012-4, School of Economic Sciences, Washington State University.
  12. Daniel, Vanessa E. & Florax, Raymond J.G.M. & Rietveld, Piet, 2009. "Flooding risk and housing values: An economic assessment of environmental hazard," Ecological Economics, Elsevier, vol. 69(2), pages 355-365, December.
  13. Kousky, Carolyn & Walls, Margaret, 2013. "Floodplain Conservation as a Flood Mitigation Strategy: Examining Costs and Benefits," Discussion Papers dp-13-22-rev, Resources For the Future.
  14. Naoi, Michio & Seko, Miki & Sumita, Kazuto, 2009. "Earthquake risk and housing prices in Japan: Evidence before and after massive earthquakes," Regional Science and Urban Economics, Elsevier, vol. 39(6), pages 658-669, November.
  15. Liu, Xiangping & Taylor, Laura O. & Hamilton, Timothy L. & Grigelis, Peter E., 2013. "Amenity values of proximity to National Wildlife Refuges: An analysis of urban residential property values," Ecological Economics, Elsevier, vol. 94(C), pages 37-43.

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