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Valuing flood disasters using the life satisfaction approach

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Listed author(s):
  • Luechinger, Simon
  • Raschky, Paul A.

Abstract

This paper argues that life satisfaction data can be used to value natural disasters. We discuss the strengths of this approach, compare it to traditional methods and apply it to estimate and monetize utility losses caused by floods in 16 European countries between 1973 and 1998. Using combined cross-section and time-series data, we find a negative impact of floods on life satisfaction that is sizeable, robust and significant. The estimates are comparable to price discounts found in housing markets. In an exploratory analysis, we find that risk transfer mechanisms such as mandatory insurance have large mitigating effects.

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File URL: http://www.sciencedirect.com/science/article/pii/S0047-2727(08)00153-9
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Article provided by Elsevier in its journal Journal of Public Economics.

Volume (Year): 93 (2009)
Issue (Month): 3-4 (April)
Pages: 620-633

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Handle: RePEc:eee:pubeco:v:93:y:2009:i:3-4:p:620-633
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505578

Keywords: Life satisfaction approach Non-market valuation Cost-benefit analysis Subjective well-being Risk-prevention Natural hazards Flood;

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