Learning from Extreme Events: Risk Perceptions after the Flood
This paper examines whether a severe flood causes homeowners to update their assessment of flood risk as seen in a change in the price of floodplain property. I use data on all single-family, residential property sales in St. Louis County, Missouri, between 1979 and 2006 in a repeat-sales model and a property fixed-effects model. After the 1993 flood on the Missouri and Mississippi rivers, property prices in 100-year floodplains did not change significantly, but prices in 500-year floodplains declined by between 2% and 5%. All property prices in municipalities located on the rivers fell postflood by 6% to 10%.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Palmquist, Raymond B., 1982. "Measuring environmental effects on property values without hedonic regressions," Journal of Urban Economics, Elsevier, vol. 11(3), pages 333-347, May.
- James Chivers & Nicholas E. Flores, 2002. "Market Failure in Information: The National Flood Insurance Program," Land Economics, University of Wisconsin Press, vol. 78(4), pages 515-521.
- Colin F. Camerer & Howard Kunreuther, 1989. "Decision processes for low probability events: Policy implications," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 8(4), pages 565-592.
- Julia L. Hansen & Earl D. Benson & Daniel A. Hagen, 2006. "Environmental Hazards and Residential Property Values: Evidence from a Major Pipeline Event," Land Economics, University of Wisconsin Press, vol. 82(4), pages 529-541.
- Terrance R. Skantz & Thomas H. Strickland, 1987. "House Prices and a Flood Event: An Empirical Investigation of Market Efficiency," Journal of Real Estate Research, American Real Estate Society, vol. 2(2), pages 75-83.
- Shilling, James D. & Sirmans, C. F. & Benjamin, John D., 1989. "Flood insurance, wealth redistribution, and urban property values," Journal of Urban Economics, Elsevier, vol. 26(1), pages 43-53, July.
- Jill J. McCluskey & Gordon C. Rausser, 2003. "Stigmatized Asset Value: Is It Temporary or Long-Term?," The Review of Economics and Statistics, MIT Press, vol. 85(2), pages 276-285, May.
- Okmyung Bin & Jamie Brown Kruse & Craig E. Landry, 2008. "Flood Hazards, Insurance Rates, and Amenities: Evidence From the Coastal Housing Market," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 75(1), pages 63-82.
- 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.
- V. Smith & Jared Carbone & Jaren Pope & Daniel Hallstrom & Michael Darden, 2006. "Adjusting to natural disasters," Journal of Risk and Uncertainty, Springer, vol. 33(1), pages 37-54, September.
- Cropper, Maureen L & Deck, Leland B & McConnell, Kenneth E, 1988. "On the Choice of Functional Form for Hedonic Price Functions," The Review of Economics and Statistics, MIT Press, vol. 70(4), pages 668-75, November.
- Kurt J. Beron & James C. Murdoch & Mark A. Thayer & Wim P. M. Vijverberg, 1997. "An Analysis of the Housing Market before and after the 1989 Loma Prieta Earthquake," Land Economics, University of Wisconsin Press, vol. 73(1), pages 101-113.
- Mendelsohn, Robert & Hellerstein, Daniel & Huguenin, Michael & Unsworth, Robert & Brazee, Richard, 1992. "Measuring hazardous waste damages with panel models," Journal of Environmental Economics and Management, Elsevier, vol. 22(3), pages 259-271, May.
- Cassel, Eric & Mendelsohn, Robert, 1985. "The choice of functional forms for hedonic price equations: Comment," Journal of Urban Economics, Elsevier, vol. 18(2), pages 135-142, September.
- Larry Dale & James C. Murdoch & Mark A. Thayer & Paul A. Waddell, 1999. "Do Property Values Rebound from Environmental Stigmas? Evidence from Dallas," Land Economics, University of Wisconsin Press, vol. 75(2), pages 311-326.
- Howard C. Kunreuther & Erwann O. Michel-Kerjan, 2007. "Climate Change, Insurability of Large-scale Disasters and the Emerging Liability Challenge," NBER Working Papers 12821, National Bureau of Economic Research, Inc.
- Hallstrom, Daniel G. & Smith, V. Kerry, 2005. "Market responses to hurricanes," Journal of Environmental Economics and Management, Elsevier, vol. 50(3), pages 541-561, November.
- Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
- Speyrer, Janet Furman & Ragas, Wade R, 1991. "Housing Prices and Flood Risk: An Examination Using Spline Regression," The Journal of Real Estate Finance and Economics, Springer, vol. 4(4), pages 395-407, December.
- Austin Troy & Jeff Romm, 2004. "Assessing the price effects of flood hazard disclosure under the California natural hazard disclosure law (AB 1195)," Journal of Environmental Planning and Management, Taylor & Francis Journals, vol. 47(1), pages 137-162.
- Kahneman, Daniel & Tversky, Amos, 1979.
"Prospect Theory: An Analysis of Decision under Risk,"
Econometric Society, vol. 47(2), pages 263-91, March.
- Amos Tversky & Daniel Kahneman, 1979. "Prospect Theory: An Analysis of Decision under Risk," Levine's Working Paper Archive 7656, David K. Levine.
- Jon P. Nelson, 1981. "Three Mile Island and Residential Property Values: Empirical Analysis and Policy Implications," Land Economics, University of Wisconsin Press, vol. 57(3), pages 363-372.
- Don N. MacDonald & James C. Murdoch & Harry L. White, 1987. "Uncertain Hazards, Insurance, and Consumer Choice: Evidence from Housing Markets," Land Economics, University of Wisconsin Press, vol. 63(4), pages 361-371.
When requesting a correction, please mention this item's handle: RePEc:uwp:landec:v:86:y:2010:iii:1:p395-422. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.