The Willingness to Pay for Flood Insurance

Netusil, N.R., C. Kousky, S. Neupane, W. Daniel, and H. Kunreuther. (2020). The Willingness to Pay for Flood Insurance.

44 Pages Posted: 19 Nov 2020

See all articles by Noelwah R. Netusil

Noelwah R. Netusil

Reed College

Carolyn Kousky

Environmental Defense Fund

Shulav Neupane

Reed College - Department of Economics

William Daniel

Reed College - Department of Economics

Howard Kunreuther

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

Date Written: May 1, 2020

Abstract

Flooding is the natural disaster that causes the most damage. Post-flood, many families are not insured and do not have sufficient savings for rebuilding and governmental aid can be limited. We undertake, using a stated preference survey, the first willingness-to-pay (WTP) elicitation for flood insurance in the U.S. WTP increases with modeled flood risk and flood risk perceptions. WTP for residents in our study area’s 100-year floodplain is 47% to 59% of the median flood insurance premium, which suggests the need for financial assistance for families that are at risk of flood damage and are unable to afford risk-based premiums.

Keywords: Flood Insurance; Affordability; FEMA

Suggested Citation

Netusil, Noelwah R. and Kousky, Carolyn and Neupane, Shulav and Daniel, William and Kunreuther, Howard C. and Kunreuther, Howard C., The Willingness to Pay for Flood Insurance (May 1, 2020). Netusil, N.R., C. Kousky, S. Neupane, W. Daniel, and H. Kunreuther. (2020). The Willingness to Pay for Flood Insurance., Available at SSRN: https://ssrn.com/abstract=3703019 or http://dx.doi.org/10.2139/ssrn.3703019

Noelwah R. Netusil (Contact Author)

Reed College ( email )

3203 SE Woodstock Blvd.
Department of Economics
Portland, OR 97202
United States

Carolyn Kousky

Environmental Defense Fund ( email )

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

Shulav Neupane

Reed College - Department of Economics ( email )

3203 SE Woodstock Boulevard
Portland, OR 97202-8199
United States

William Daniel

Reed College - Department of Economics ( email )

3203 SE Woodstock Boulevard
Portland, OR 97202-8199
United States

Howard C. Kunreuther

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)

National Bureau of Economic Research (NBER)

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