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Natural and Industrial Disasters : Land Use and Insurance

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  • Céline Grislain-Letrémy

    ()
    (CREST)

  • Bertrand Villeneuve

    ()
    (CREST, Université Paris-Dauphine)

Abstract

Urbanization in exposed areas increases the cost of disasters. For industrial risks, potential victims raise firms’ liabilities. For natural risks, overexposure by some undermines mutualization. Land use policy (particularly exclusion zones) and insurance shape urbanization, but their efficiency is limited by hazard-map precision. Map-based discrimination being politically sensitive, we identify an operation of map redrawing that increases the welfare of all. Climate change and population growth increase risk. We exhibit realistic cases where exclusion zones shrink as risk rises. We disentangle the competing effects at play. Results are established for alternative distributions of bargaining power between households, mayor and firm.

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Bibliographic Info

Paper provided by Centre de Recherche en Economie et Statistique in its series Working Papers with number 2011-32.

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Length: 30
Date of creation: Dec 2011
Date of revision:
Handle: RePEc:crs:wpaper:2011-32

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Keywords: natural disasters; industrial disasters; insurance; land use regulation; hazard maps;

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  14. repec:hal:journl:halshs-00180909 is not listed on IDEAS
  15. David M. Harrison & Greg T. Smersh & Arthur L. Schwartz, Jr, 2001. "Environmental Determinants of Housing Prices: The Impact of Flood Zone Status," Journal of Real Estate Research, American Real Estate Society, vol. 21(1/2), pages 3-20.
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