MONETARY VALUATION OF INSURANCE AGAINST FLOOD RISK UNDER CLIMATE CHANGE

Climate change is projected to increase the risk of natural disasters, such as floods and storms, in certain regions. This is likely to raise the demand for natural disaster insurance. We present a stated preference survey using choice modeling with mixed logit estimation methods in order to examine...

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Bibliographic Details
Published in:International economic review (Philadelphia) 2012-08, Vol.53 (3), p.1005-1026
Main Authors: Wouter Botzen, W. J., Van Den Bergh, Jeroen C. J. M.
Format: Article
Language:English
Subjects:
Climate change
Decision models
Disaster insurance
Disaster relief
Economic models
Financial risk
Flood damage
Flood insurance
Floods
Home ownership
Homeowners insurance
Insurance coverage
Insurance premiums
International economics
Monetary economics
Natural disasters
Netherlands
Preferences
Risk management
Risk premiums
Studies
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Summary:Climate change is projected to increase the risk of natural disasters, such as floods and storms, in certain regions. This is likely to raise the demand for natural disaster insurance. We present a stated preference survey using choice modeling with mixed logit estimation methods in order to examine the effects of climate change and the availability of government compensation on the demand for flood insurance by Dutch homeowners. Currently, no private insurance against flood damage is offered in the Netherlands. The results indicate that there are opportunities for the development of a flood insurance market.
ISSN:0020-6598
1468-2354
DOI:10.1111/j.1468-2354.2012.00709.x