Bounded Rationality, Climate Risks, and Insurance: Is There a Market for Natural Disasters?
AbstractThis paper examines the role of insurances to reduce uncertainty associated with climate change losses for individuals. Of special interest is the value individuals place on the reduction of increased flood risks by insurance coverage. Using rank-dependent utility and prospect theories, risk premiums are estimated under different climate change scenarios for the Netherlands. The study delivers two main insights. First, estimation results suggest that a profitable flood insurance market could be feasible. Second, climate change has the potential to increase the profitability of offering flood insurance.
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Bibliographic InfoArticle provided by University of Wisconsin Press in its journal Land Economics.
Volume (Year): 85 (2009)
Issue (Month): 2 ()
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Web page: http://le.uwpress.org/
Find related papers by JEL classification:
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
- Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
- Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters
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- Kai A. Konrad & Marcel Thum, 2012. "The Role of Economic Policy in Climate Change Adaptation," CESifo Working Paper Series 3959, CESifo Group Munich.
- repec:mar:magkse:20134 is not listed on IDEAS
- Nicola Ranger & Andrew Williamson, 2011. "Forecasting non-life insurance demand in the BRICS economies: a preliminary evaluation of the impacts of income and climate change," Grantham Research Institute on Climate Change and the Environment Working Papers 61, Grantham Research Institute on Climate Change and the Environment.
- Claudia Schwirplies & Andreas Ziegler, 2013. "Are German Tourists Environmental Chameleons? A Micro-econometric Analysis of Adaptation to Climate Change," MAGKS Papers on Economics 201334, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
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