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Natural disasters, land-use, and insurance

Author

Listed:
  • Céline Grislain-Letrémy

    () (PSL Research University)

  • Bertrand Villeneuve

    () (PSL Research University)

Abstract

Abstract This paper addresses the urbanization of areas exposed to natural disasters and studies its dependency on land-use and insurance policies. In practice, we observe simple policies, consisting of a prohibited red zone and a zone without insurance tariff differentiation. Even if there are fixed damages per dwelling, the red-zone policy is relatively efficient; it implements the optimal land-use if the losses are proportional to the surface used. The main results are on the effects redefining the optimal red zone as the climate or the population changes. We expose plausible cases in which the red zone grows with a growing population.

Suggested Citation

  • Céline Grislain-Letrémy & Bertrand Villeneuve, 2019. "Natural disasters, land-use, and insurance," The Geneva Papers on Risk and Insurance Theory, Springer;International Association for the Study of Insurance Economics (The Geneva Association), vol. 44(1), pages 54-86, March.
  • Handle: RePEc:kap:geneva:v:44:y:2019:i:1:d:10.1057_s10713-018-0032-0
    DOI: 10.1057/s10713-018-0032-0
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    References listed on IDEAS

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    More about this item

    Keywords

    Natural disasters; Insurance; Land-use regulation; Climate change;

    JEL classification:

    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • R52 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Land Use and Other Regulations
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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