Protecting Against Flood Impacts

Abstract

As the threat of flooding intensifies, the need for policies that align with household preferences for addressing flood risk becomes increasingly important. We conducted a discrete choice experiment to elicit homeowner preferences for purchasing overland flood insurance or making risk-reducing home improvements. Results from a latent class logit model indicate the presence of four preference classes, characterized by their preferred response to flood risk: insurance, home improvements, insurance and home improvements, and neither insurance nor home improvements. We subsequently evaluate household responses to insurance and home improvement subsidies, offering insights into the effectiveness of incentives for encouraging protective actions against flooding.