Flood Hazards, Insurance Rates, and Amenities: Evidence from the Coastal Housing Market

20 Pages Posted: 10 Mar 2008

See all articles by Okmyung Bin

Okmyung Bin

East Carolina University - Department of Economics

Jamie B. Kruse

East Carolina University - Department of Economics

Craig E. Landry

University of Georgia - Department of Agricultural & Applied Economics

Abstract

This study employs the hedonic property price method to examine the effects of flood hazard on coastal property values. We utilize Geographic Information System data on National Flood Insurance Program flood zones and residential property sales from Carteret County, North Carolina. Our results indicate that location within a flood zone lowers property value. Price differentials for flood risk and the capitalized value of flood insurance premiums are roughly equivalent - both exhibiting a nonlinear relationship in flood probability. Our results support the conclusion that flood zone designation and insurance premiums convey risk information to potential buyers in the coastal housing market.

Suggested Citation

Bin, Okmyung and Kruse, Jamie B. and Landry, Craig, Flood Hazards, Insurance Rates, and Amenities: Evidence from the Coastal Housing Market. Journal of Risk & Insurance, Vol. 75, No. 1, pp. 63-82, March 2008. Available at SSRN: https://ssrn.com/abstract=1103699 or http://dx.doi.org/10.1111/j.1539-6975.2007.00248.x

Okmyung Bin (Contact Author)

East Carolina University - Department of Economics ( email )

Brewster Building
Greenville, NC 27858
United States

Jamie B. Kruse

East Carolina University - Department of Economics ( email )

Brewster Building
Greenville, NC 27858
United States
(252) 328-4165 (Phone)
(252) 328-6743 (Fax)

HOME PAGE: http://www.ecu.edu/econ/faculty/krusej/

Craig Landry

University of Georgia - Department of Agricultural & Applied Economics ( email )

Athens, GA 30602-7509
United States

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