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 and/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.