Household Sorting as Adaptation to Hurricane Risk in the United States

Abstract

We employ a structural model of location choice to estimate household sorting across the United States in response to hurricane risk. Using spatially detailed projections of future hurricane energy, we simulate regional population shifts and welfare effects of hurricane risk–induced migration in 2100. We find heterogeneous responses to hurricane risk for households that vary by number of children, age, educational attainment, and prior exposure to hurricane risk. Under future hurricane risk, although changes are small, we find declines in regional population shares along the hurricane-prone coasts and negative overall welfare effect. However, ignoring the spatial heterogeneity of hurricanes underestimates these effects. (JEL Q51, Q54)