Flood Risk and the U.S. Housing Market

45 Pages Posted: 31 Jul 2019

See all articles by Howard Kunreuther

Howard Kunreuther

National Bureau of Economic Research (NBER); University of Pennsylvania - Wharton Risk Management and Decision Processes Center

Susan M. Wachter

University of Pennsylvania - Wharton School, Department of Real Estate ; University of Pennsylvania - Finance Department

Carolyn Kousky

Environmental Defense Fund

Michael LaCour-Little

California State University - Fullerton - Department of Finance

Date Written: February 1, 2019

Abstract

As recent hurricane seasons have made clear, flooding can cause a great deal of property damage and human suffering. Indeed, flooding causes the most damage of any natural disaster in the United States and worldwide and affects the greatest number of people. Yet today most households are uninsured, or underinsured, against flood losses and may incorrectly perceive that if they suffer property damage, government agencies and programs will significantly aid them financially soon after the disaster. In reality there is limited financial aid provided by the public sector to disaster victims and it is often delayed in the post-disaster period. This paper synthesizes existing research on the nature of flood risk and the housing market in the United States with a particular focus on the single-family market segment, a large category of the wealth on household balance sheets. We also consider flood risk externalities affecting the housing market more broadly.

Keywords: flood risk, housing market, insurance

JEL Classification: R

Suggested Citation

Kunreuther, Howard C. and Kunreuther, Howard C. and Wachter, Susan M. and Kousky, Carolyn and LaCour-Little, Michael, Flood Risk and the U.S. Housing Market (February 1, 2019). Available at SSRN: https://ssrn.com/abstract=3426638 or http://dx.doi.org/10.2139/ssrn.3426638

Howard C. Kunreuther

National Bureau of Economic Research (NBER)

University of Pennsylvania - Wharton Risk Management and Decision Processes Center ( email )

3819 Chestnut Street
Suite 130
Philadelphia, PA 19104
United States
215-898-4589 (Phone)

Susan M. Wachter

University of Pennsylvania - Wharton School, Department of Real Estate ( email )

The Wharton School
3620 Locust Walk
Philadelphia, PA 19104-6330
United States
215-898-6355 (Phone)

HOME PAGE: http://real.wharton.upenn.edu/~wachter/index.html

University of Pennsylvania - Finance Department ( email )

The Wharton School
3620 Locust Walk
Philadelphia, PA 19104
United States

HOME PAGE: http://real.wharton.upenn.edu/~wachter/index.html

Carolyn Kousky (Contact Author)

Environmental Defense Fund ( email )

1875 Connecticut ave
257 Park Avenue South
Washington, DC 20009
United States

Michael LaCour-Little

California State University - Fullerton - Department of Finance ( email )

2600 E. Nutwood, 1060-26
Fullerton, CA 92834
United States
657-278-4014 (Phone)
657-278-2161 (Fax)

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