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Determinants of insurance demand against forest fire risk: an empirical analysis of French private forest owners

Author

Listed:
  • Marielle Brunette

    (UMR INRA – AgroParisTech, Laboratoire d’Économie Forestière, 54042 Nancy Cedex, France)

  • Stéphane Couture

    (INRA, UR 875, Unité de mathématiques et informatique appliquées de Toulouse, 31326 Castanet-Tolosan
    UMR INRA – AgroParisTech, Laboratoire d’Économie Forestière, 54042 Nancy Cedex, France)

Abstract

In this article, we combine experimental data and individual data on French private forests to estimate the forest owners’ insurance demand against fire risk. Our econometric analysis consists in estimating both insurance participation and coverage-level decision from a field experiment. The estimation method accounts for sample selection issues coming from observed insurance decision and correlation between insurance choice and willingness to pay (WTP). Our results clearly show that, while past public assistance has no significant effect on insurance participation, the experimental type of public assistance program has. Other attributes of the experiment such as the expected loss only explains WTP variations, whereas the existence of an ambiguity concerning the probability of fire occurrence positively affects both insurance participation and WTP levels. Finally, our results are discussed in connection with potential brakes to the development of the insurance market.

Suggested Citation

  • Marielle Brunette & Stéphane Couture, 2016. "Determinants of insurance demand against forest fire risk: an empirical analysis of French private forest owners," Working Papers - Cahiers du LEF 2016-01, Laboratoire d'Economie Forestiere, AgroParisTech-INRA, revised Jan 2016.
    • Handle: RePEc:lef:wpaper:2016-01
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    File URL: http://www6.nancy.inra.fr/lef/Cahiers-du-LEF/2016/2016-01
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    Cited by:

    1. M. Brunette & S. Couture & J. Foncel & S. Garcia, 2020. "The decision to insure against forest fire risk: an econometric analysis combining hypothetical real data," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 45(1), pages 111-133, January.
    2. Marielle Brunette & Stéphane Couture & Jérôme Foncel & Serge S. Garcia, 2017. "Insurance decision against forest fire : An econometric analysis combining experimental and real data," Post-Print hal-02785187, HAL.

    More about this item

    Keywords

    climate change; adaptation; externality; PPPs;
    All these keywords.

    JEL classification:

    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • Q23 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Forestry
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy

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