Building a Safe Port in the Storm: Private vs. Public Choices in Hurricane Mitigation

Abstract

This Policy Comment analyzes the connection between hurricane mitigation and insurance. As many people fail to purchase government-subsidized flood and earthquake insurance, some researchers argue that market failure explains the lack of mitigation. But empirical evidence shows that markets do value natural hazards risks, including hurricane mitigation, and thus the case for market failure has been overstated.

Keywords: mitigation, insurance, Hurricane Katrina