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Assessing the drivers of flood risk reduction actions of businesses

Author

Listed:
  • Vylon Ooms

    (Institute for Environmental Studies (IVM)
    Dutch Association of Insurers)

  • Thijs Endendijk

    (Institute for Environmental Studies (IVM))

  • Jeroen C. J. H. Aerts

    (Institute for Environmental Studies (IVM))

  • W. J. Wouter Botzen

    (Institute for Environmental Studies (IVM))

  • Peter John Robinson

    (Institute for Environmental Studies (IVM))

Abstract

Climate change and socio-economic development are expected to increase flood risk. Businesses can prepare for increasing flood risk by taking flood damage mitigation (FDM) measures, or by purchasing insurance. However, little is known about the predictors of the uptake of various FDM measures by businesses. Our study uses survey data after flooding in the Netherlands in 2021 to understand the drivers of FDM actions of businesses. Our results indicate that insured businesses are neither significantly more or less likely to take FDM measures compared to uninsured businesses. Therefore, we do not see evidence of moral hazard or advantageous selection. Positive predictors of FDM uptake are receipt of early warnings, searching for information about flood risk, prior flood experience and feelings of responsibility for taking FDM measures. Our results show that insurers can stimulate FDM uptake of businesses via early warnings and information provision.

Suggested Citation

  • Vylon Ooms & Thijs Endendijk & Jeroen C. J. H. Aerts & W. J. Wouter Botzen & Peter John Robinson, 2025. "Assessing the drivers of flood risk reduction actions of businesses," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 50(2), pages 335-364, April.
    • Handle: RePEc:pal:gpprii:v:50:y:2025:i:2:d:10.1057_s41288-024-00338-9
    DOI: 10.1057/s41288-024-00338-9
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    References listed on IDEAS

    as
    1. Mol, Jantsje M. & Botzen, W.J. Wouter & Blasch, Julia E., 2020. "Behavioral motivations for self-insurance under different disaster risk insurance schemes," Journal of Economic Behavior & Organization, Elsevier, vol. 180(C), pages 967-991.
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    9. Paul Hudson & Philip Bubeck & Annegret H. Thieken, 2022. "A comparison of flood-protective decision-making between German households and businesses," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 27(1), pages 1-22, January.
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