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Flood Risk Perception in the Housing Market and the Impact of a Major Flood Event

Author

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  • Hannah Hennighausen
  • Jordan F. Suter

Abstract

The impact of flood events on flood risk perception has important implications for policy. Applying a novel dataset featuring the flooding extents from a severe event in Colorado, we disentangle inundated properties from “near misses,” defined as structures not directly flooded but located inside the 100-year floodplain. Using a triple-difference hedonic framework, we show that inundated properties inside the floodplain underwent a decrease in price after the flood, while near misses saw a relative price increase. We speculate that inundated properties are perceived as being riskier and near misses relatively less risky, suggesting the possible influence of the availability heuristic or Bayesian learning.

Suggested Citation

  • Hannah Hennighausen & Jordan F. Suter, 2020. "Flood Risk Perception in the Housing Market and the Impact of a Major Flood Event," Land Economics, University of Wisconsin Press, vol. 96(3), pages 366-383.
    • Handle: RePEc:uwp:landec:v:96:y:2020:1:3:p:366-383
    Note: DOI: 10.3368/le.96.3.366
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    Citations

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    Cited by:

    1. Alexander Daminger & Kristof Dascher, 2023. "Homeowner Subsidy Repeal and Housing Recentralization," Land Economics, University of Wisconsin Press, vol. 99(2), pages 283-301.
    2. Quyen Nguyen & Paul Thorsnes & Ivan Diaz‐Rainey & Antoni Moore & Simon Cox & Leon Stirk‐Wang, 2022. "Price recovery after the flood: risk to residential property values from climate change‐related flooding," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 66(3), pages 532-560, July.
    3. Josphat Nyoni & Conilloois Gwatirisa & Yvette Nyasha Nyanzira & Martin Dandira & Elias Kandjinga, 2021. "The Plight of Women during and After Floods. A Case Study of the Mbire District, Zimbabwe," International Journal of Research and Scientific Innovation, International Journal of Research and Scientific Innovation (IJRSI), vol. 8(4), pages 44-49, April.
    4. Matthew R. Sloggy & Jordan F. Suter & Mani Rouhi Rad & Dale T. Manning & Chris Goemans, 2021. "Changing opinions on a changing climate: the effects of natural disasters on public perceptions of climate change," Climatic Change, Springer, vol. 168(3), pages 1-26, October.
    5. Wang, Haoluan, 2021. "Flood Your Neighbors: Spillover Effects of Levee Building," 95th Annual Conference, March 29-30, 2021, Warwick, UK (Hybrid) 311091, Agricultural Economics Society - AES.
    6. Vito Frontuto & Silvana Dalmazzone & Francesco Salcuni & Alessandro Pezzoli, 2020. "Risk Aversion, Inequality and Economic Evaluation of Flood Damages: A Case Study in Ecuador," Sustainability, MDPI, vol. 12(23), pages 1-17, December.
    7. Melissa Chow & Jordan Stanley, 2020. "A Shore Thing: Post-Hurricane Outcomes for Businesses in Coastal Areas," Working Papers 20-27, Center for Economic Studies, U.S. Census Bureau.
    8. Marie Lautrup & Lasse Læbo Matthiesen & Jette Bredahl Jacobsen & Toke Emil Panduro, 2023. "Welfare Effects and the Immaterial Costs of Coastal Flooding," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 85(2), pages 415-441, June.

    More about this item

    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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