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Analysis of Spatial Variation in Flood Risk Perception

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  • Atreya, Ajita
  • Susana, Ferreira

Abstract

We use hedonic property models to estimate the spatial variation in flood risk in the city of Albany, GA. In addition to knowing whether a property is in the floodplain, we have a unique dataset with actual inundation maps from tropical storm Alberto that hit Albany in 1994. In the absence of information on the structural damages caused by a flood, having information on the actual inundated area can be useful to tease out information effect of a new flood from potential reconstruction cost. We find that the discount in actually inundated properties is larger which supports our hypothesis that homeowners respond better to what they have visualized (“seeing is believing”) and also the potential reconstruction cost in addition to information effect is capitalized in property prices.

Suggested Citation

  • Atreya, Ajita & Susana, Ferreira, 2012. "Analysis of Spatial Variation in Flood Risk Perception," 2012 Annual Meeting, February 4-7, 2012, Birmingham, Alabama 119738, Southern Agricultural Economics Association.
    • Handle: RePEc:ags:saea12:119738
    DOI: 10.22004/ag.econ.119738
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    References listed on IDEAS

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    2. Kelejian, Harry H. & Prucha, Ingmar R., 2010. "Specification and estimation of spatial autoregressive models with autoregressive and heteroskedastic disturbances," Journal of Econometrics, Elsevier, vol. 157(1), pages 53-67, July.
    3. 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..
    4. Bernard Fingleton & Julie Le Gallo, 2008. "Estimating spatial models with endogenous variables, a spatial lag and spatially dependent disturbances: Finite sample properties," Papers in Regional Science, Wiley Blackwell, vol. 87(3), pages 319-339, August.
    5. Irani Arraiz & David M. Drukker & Harry H. Kelejian & Ingmar R. Prucha, 2010. "A Spatial Cliff‐Ord‐Type Model With Heteroskedastic Innovations: Small And Large Sample Results," Journal of Regional Science, Wiley Blackwell, vol. 50(2), pages 592-614, May.
    6. Luc Anselin & Raymond J. G. M. Florax, 1995. "Small Sample Properties of Tests for Spatial Dependence in Regression Models: Some Further Results," Advances in Spatial Science, in: Luc Anselin & Raymond J. G. M. Florax (ed.), New Directions in Spatial Econometrics, chapter 2, pages 21-74, Springer.
    7. Julie Le Gallo & Bernard Fingleton, 2008. "Estimating spatial models with endogenous variables, a spatial lag and spatially dependent disturbances : finite sample properties," Post-Print hal-00485035, HAL.
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    Keywords

    Environmental Economics and Policy; Land Economics/Use;

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