Flood Insurance Coverage in the Coastal Zone

East Carolina University Economics Department Working Paper No. ecu0804

40 Pages Posted: 27 Apr 2011

See all articles by Craig E. Landry

Craig E. Landry

UGA Ag & Applied Economics

Mohammad R. Jahan-Parvar

Board of Governors of the Federal Reserve System

Date Written: December 1, 2008

Abstract

We explore behavior and test theory regarding the determinants of flood insurance coverage in the coastal zone using micro-data for nine southeastern counties. Overall estimates indicate price inelastic demand, though subsidized policyholders have greater coverage and are more price sensitive. Mortgage-borrowers exhibit greater coverage and less elastic demand, though only 38% claim flood insurance was required by their lender. Flood insurance demand is positively correlated with the level of flood risk. Households facing higher erosion hazard demand greater coverage. Community level erosion hazard mitigation projects influence flood insurance holdings, with shoreline armoring acting as a substitute and beach replenishment acting as a complement.

Keywords: Insurance coverage, flood, hazard, coastal, erosion, Tobit model

JEL Classification: D81, G22,

Suggested Citation

Landry, Craig and Jahan-Parvar, Mohammad, Flood Insurance Coverage in the Coastal Zone (December 1, 2008). East Carolina University Economics Department Working Paper No. ecu0804, Available at SSRN: https://ssrn.com/abstract=1824396 or http://dx.doi.org/10.2139/ssrn.1824396

Craig Landry (Contact Author)

UGA Ag & Applied Economics ( email )

Athens, GA 30602-7509
United States

Mohammad Jahan-Parvar

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

HOME PAGE: http://sites.google.com/site/mrjahan/

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