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The Willingness to Pay for Flood Insurance

Author

Listed:
  • Noelwah R. Netusil
  • Carolyn Kousky
  • Shulav Neupane
  • Will Daniel
  • Howard Kunreuther

Abstract

Flooding is the natural disaster that causes the most damage. Postflood, many families are not insured and do not have sufficient savings for rebuilding, and governmental aid can be limited. We undertake, using a stated preference survey, the first willingness-to-pay (WTP) elicitation for flood insurance in the United States. WTP increases with modeled flood risk and flood-risk perceptions. WTP for residents in our study area’s 100-year floodplain is 47% to 59% of the median flood insurance premium, which suggests the need for financial assistance for families who are at risk of flood damage and are unable to afford risk-based premiums.

Suggested Citation

  • Noelwah R. Netusil & Carolyn Kousky & Shulav Neupane & Will Daniel & Howard Kunreuther, 2021. "The Willingness to Pay for Flood Insurance," Land Economics, University of Wisconsin Press, vol. 97(1), pages 17-38.
    • Handle: RePEc:uwp:landec:v:97:y:2021:i:1:p:17-38
    Note: DOI: 10.3368/wple.97.1.110819-0160R1
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    Citations

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    Cited by:

    1. Guibril Zerbo, 2024. "Disposition à payer pour l’assurance contre les risques naturels: une étude de terrain au Burkina Faso," EconomiX Working Papers 2024-7, University of Paris Nanterre, EconomiX.
    2. Justin Contat & Caroline Hopkins & Luis Mejia & Matthew Suandi, 2023. "When Climate Meets Real Estate: A Survey of the Literature," FHFA Staff Working Papers 23-05, Federal Housing Finance Agency.
    3. Carolyn Kousky & Noelwah R. Netusil, 2023. "Flood insurance literacy and flood risk knowledge: Evidence from Portland, Oregon," Risk Management and Insurance Review, American Risk and Insurance Association, vol. 26(2), pages 175-201, July.
    4. Carolyn Kousky & Helen Wiley & Len Shabman, 2021. "Can Parametric Microinsurance Improve the Financial Resilience of Low-Income Households in the United States?," Economics of Disasters and Climate Change, Springer, vol. 5(3), pages 301-327, October.
    5. Liao, Yanjun (Penny) & Mulder, Philip, 2021. "What's at Stake? Understanding the Role of Home Equity in Flood Insurance Demand," RFF Working Paper Series 21-25, Resources for the Future.

    More about this item

    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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