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Assessing the Determinants of Willingness to Pay for Urban Flood Control: The Role of Locational, Demographic and attitudinal Factors

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  • David E. Clark

    ()
    (Department of Economics, Marquette University)

  • Robert Griffin

    ()
    (Department of Communications, Marquette University)

  • Vladimir Novoty

    (Department of Civil and Enviornmental Engineering, Northeastern University)

Abstract

The urbanization of urban watersheds can influence flooding risks. Traditional Federal Emergency Management Agency (FEMA) flood risk maps identify 100 year floodplains. These maps are updated infrequently. However, as a community urbanizes, flood risks can change, especially for downstream residents. Thus, one would expect that the willingness to pay (WTP) to prevent the worsening of flooding risk would depend in part on the location of the household in the community and their associated flooding risk. Economists and regional scientists have evaluated the role played by traditional demographic factors. However, attitudinal factors measuring community norms, political philosophy, and other psychological factors that may be unique to the individual have not received the same level of scrutiny. Milwaukee, WI has experienced major flooding events, classified as floods with an expected frequency of once every 100 years or less, in 1986 and most recently in 1997 and 1998. In this study, 1000 residents of the Menomonee watershed in Milwaukee were interviewed in a two-wave panel survey (i.e., telephone interviews took place in 2000 and 2001) to determine their willingness to pay for a referendum which would prevent flood risks from worsening. The interviews queried respondents about their attitudes concerning flooding and ecological risks, political beliefs, information seeking behavior, and other psychological factors unique to the respondent. Information was also gathered on demographic characteristics of the respondent, and also that individuals address. The address was geocoded and hydrologic modeling was used to determine the unique flood risk associated with the residence. A willingness to pay function was estimated using Tobit analysis. Preliminary findings indicated that all three categories of factors influence willingness to pay, with psychological factors and flood risk factors having a relatively strong impact on willingness to pay. Paper prepared for the 2005 Annual Meetings of the Midcontinent Regional Science Association and the Southern Regional Science Association in Arlington VA, April 8-10, 2005. PLEASE DO NOT QUOTE WITHOUT PERMISSION.

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File URL: http://www.busadm.mu.edu/mrq/workingpapers/wpaper0503.pdf
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Paper provided by Marquette University, Center for Global and Economic Studies and Department of Economics in its series Working Papers and Research with number 0503.

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Length: 14 Pages
Date of creation: Apr 2005
Date of revision:
Handle: RePEc:mrq:wpaper:0503

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Postal: P.O. Box 1881, Milwaukee WI 53201-1881
Phone: (414) 288-7377
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Web page: http://www.busamd.mu.edu/Economics/
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  1. Harrison, Glenn W., 1992. "Valuing public goods with the contingent valuation method: A critique of kahneman and knetsch," Journal of Environmental Economics and Management, Elsevier, vol. 23(3), pages 248-257, November.
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  5. Carson, Richard T. & Hanemann, W. Michael, 2006. "Contingent Valuation," Handbook of Environmental Economics, in: K. G. Mäler & J. R. Vincent (ed.), Handbook of Environmental Economics, edition 1, volume 2, chapter 17, pages 821-936 Elsevier.
  6. Schoemaker, Paul J H, 1982. "The Expected Utility Model: Its Variants, Purposes, Evidence and Limitations," Journal of Economic Literature, American Economic Association, vol. 20(2), pages 529-63, June.
  7. Smith, V. Kerry, 1992. "Arbitrary values, good causes, and premature verdicts," Journal of Environmental Economics and Management, Elsevier, vol. 22(1), pages 71-89, January.
  8. Smith, V Kerry & Desvousges, William H, 1987. "An Empirical Analysis of the Economic Value of Risk Changes," Journal of Political Economy, University of Chicago Press, vol. 95(1), pages 89-114, February.
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