The Willingness to Pay for Flood Insurance

Netusil, Noelwah R.; Kousky, Carolyn; Neupane, Shulav; Daniel, William; Kunreuther, Howard

doi:10.2139/ssrn.3703019

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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

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: 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