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Individual preferences for reducing flood risk to near zero through elevation

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  • W. Botzen
  • J. Aerts
  • J. Bergh

Abstract

Climate change is expected to increase the frequency and intensity of natural disasters. Adaptation investments are required in order to limit the projected increase in natural disaster risks. Adaptation measures can reduce risk partially or completely eliminate risk. The literature on behavioural economics suggests that individuals rarely undertake measures that limit risk partially, while they may place a considerable value on measures that reduce risk to zero. This is studied for a case of adaptation to climate change and its effects on flood risk in the Netherlands. In particular, we examine whether households are willing to invest in elevating newly built structures when this is framed as eliminating flood risk. The results indicate that a majority of homeowners (52%) is willing to make a substantial investment of €10,000 to elevate a new house to a level that is safe to flooding. Differences between willingness to pay (WTP) for flood insurance and WTP for risk elimination through elevation indicate that individuals place a considerable value on the latter adaptation option. This study estimates that the “safety premium” which individuals place on risk elimination is approximately between €35 and €45 per month. The existence of a safety premium has important implications for the design of climate change adaptation policies. The decision to invest in elevating homes is significantly correlated with the expected negative effects of climate change, perceptions of flood risks, individual risk attitudes, and living close to a main river. Copyright The Author(s) 2013

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  • W. Botzen & J. Aerts & J. Bergh, 2013. "Individual preferences for reducing flood risk to near zero through elevation," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 18(2), pages 229-244, February.
    • Handle: RePEc:spr:masfgc:v:18:y:2013:i:2:p:229-244
    DOI: 10.1007/s11027-012-9359-5
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    2. Chloe H. Lucas & Kate I. Booth & Carolina Garcia, 2021. "Insuring homes against extreme weather events: a systematic review of the research," Climatic Change, Springer, vol. 165(3), pages 1-21, April.
    3. Victor Champonnois & Katrin Erdlenbruch, 2020. "Willingness of households to reduce flood risk in southern France," Working Papers hal-02586069, HAL.
    4. Thomas Beery, 2018. "Engaging the Private Homeowner: Linking Climate Change and Green Stormwater Infrastructure," Sustainability, MDPI, vol. 10(12), pages 1-16, December.
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    6. Jana Koerth & Athanasios T. Vafeidis & Jochen Hinkel, 2017. "Household‐Level Coastal Adaptation and Its Drivers: A Systematic Case Study Review," Risk Analysis, John Wiley & Sons, vol. 37(4), pages 629-646, April.
    7. Osberghaus, Daniel, 2015. "The determinants of private flood mitigation measures in Germany — Evidence from a nationwide survey," Ecological Economics, Elsevier, vol. 110(C), pages 36-50.
    8. Yilin Zou & Alexia Stock & Rachel Davidson & Linda Nozick & Joseph Trainor & Jamie Kruse, 2020. "Perceived attributes of hurricane-related retrofits and their effect on household adoption," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 104(1), pages 201-224, October.
    9. Chen Cao & Peihua Xu & Yihong Wang & Jianping Chen & Lianjing Zheng & Cencen Niu, 2016. "Flash Flood Hazard Susceptibility Mapping Using Frequency Ratio and Statistical Index Methods in Coalmine Subsidence Areas," Sustainability, MDPI, vol. 8(9), pages 1-18, September.
    10. Alló, Maria & Loureiro, Maria L., 2014. "The role of social norms on preferences towards climate change policies: A meta-analysis," Energy Policy, Elsevier, vol. 73(C), pages 563-574.
    11. Frans Klijn & Bruno Merz & Edmund Penning-Rowsell & Zbigniew Kundzewicz, 2015. "Preface: climate change proof flood risk management," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 20(6), pages 837-843, August.
    12. Eoin O'Neill & Finbarr Brereton & Harutyun Shahumyan & J. Peter Clinch, 2016. "The Impact of Perceived Flood Exposure on Flood‐Risk Perception: The Role of Distance," Risk Analysis, John Wiley & Sons, vol. 36(11), pages 2158-2186, November.
    13. Chen Cao & Jianping Chen & Wen Zhang & Peihua Xu & Lianjing Zheng & Chun Zhu, 2019. "Geospatial Analysis of Mass-Wasting Susceptibility of Four Small Catchments in Mountainous Area of Miyun County, Beijing," IJERPH, MDPI, vol. 16(15), pages 1-19, August.
    14. Barbora Duží & Dmytro Vikhrov & Ilan Kelman & Robert Stojanov & Jiří Jakubínský, 2015. "Household flood risk reduction in the Czech Republic," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 20(4), pages 499-504, April.
    15. Alejandra Maldonado & Timothy W. Collins & Sara E. Grineski & Jayajit Chakraborty, 2016. "Exposure to Flood Hazards in Miami and Houston: Are Hispanic Immigrants at Greater Risk than Other Social Groups?," IJERPH, MDPI, vol. 13(8), pages 1-20, August.
    16. Duong Hai Ha & Phong Tung Nguyen & Romulus Costache & Nadhir Al-Ansari & Tran Phong & Huu Duy Nguyen & Mahdis Amiri & Rohit Sharma & Indra Prakash & Hiep Le & Hanh Bich Thi Nguyen & Binh Thai Pham, 2021. "Quadratic Discriminant Analysis Based Ensemble Machine Learning Models for Groundwater Potential Modeling and Mapping," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 35(13), pages 4415-4433, October.
    17. Mark Schneider, 2019. "A Bias Aggregation Theorem," Working Papers 19-03, Chapman University, Economic Science Institute.
    18. Mark Stewart, 2015. "Risk and economic viability of housing climate adaptation strategies for wind hazards in southeast Australia," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 20(4), pages 601-622, April.
    19. Angela Mallette & Timothy F. Smith & Carmen Elrick-Barr & Jessica Blythe & Ryan Plummer, 2021. "Understanding Preferences for Coastal Climate Change Adaptation: A Systematic Literature Review," Sustainability, MDPI, vol. 13(15), pages 1-22, August.
    20. Aftab, Ashar & Ahmed, Ajaz & Scarpa, Riccardo, 2021. "Farm households' perception of weather change and flood adaptations in northern Pakistan," Ecological Economics, Elsevier, vol. 182(C).
    21. Tiberio Daddi & Niccolò Maria Todaro & Maria Rosa De Giacomo & Marco Frey, 2018. "A Systematic Review of the Use of Organization and Management Theories in Climate Change Studies," Business Strategy and the Environment, Wiley Blackwell, vol. 27(4), pages 456-474, May.
    22. Robert Stojanov & Barbora Duží & Tomáš Daněk & Daniel Němec & David Procházka, 2015. "Adaptation to the Impacts of Climate Extremes in Central Europe: A Case Study in a Rural Area in the Czech Republic," Sustainability, MDPI, vol. 7(9), pages 1-29, September.
    23. Sauer, Johannes & Finger, Robert, 2014. "Climate Risk Management Strategies in Agriculture – The Case of Flood Risk," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 172679, Agricultural and Applied Economics Association.
    24. Meri Davlasheridze & Kayode O. Atoba & Samuel Brody & Wesley Highfield & William Merrell & Bruce Ebersole & Adam Purdue & Robert W. Gilmer, 2019. "Economic impacts of storm surge and the cost-benefit analysis of a coastal spine as the surge mitigation strategy in Houston-Galveston area in the USA," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 24(3), pages 329-354, March.
    25. Bosy A. El-Haddad & Ahmed M. Youssef & Hamid R. Pourghasemi & Biswajeet Pradhan & Abdel-Hamid El-Shater & Mohamed H. El-Khashab, 2021. "Flood susceptibility prediction using four machine learning techniques and comparison of their performance at Wadi Qena Basin, Egypt," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 105(1), pages 83-114, January.

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