Die Dis cus si on Pape rs die nen einer mög lichst schnel len Ver brei tung von neue ren For schungs arbei ten des ZEW. Die Bei trä ge lie gen in allei ni ger Ver ant wor tung der Auto ren und stel len nicht not wen di ger wei se die Mei nung des ZEW dar.Dis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW. AbstractPublic flood protection cannot totally eliminate the risk of flooding. Hence, private mitigation measures which proactively protect homes from being flooded or reduce flood damage are an essential part of modern flood risk management. This study analyses private flood mitigation measures among German households. The dataset covers more than 6000 households from all parts of the country, including flood plains as well as areas which are typically not at a high risk of riverine flooding. The results suggest that the propensity to mitigate flood damage increases i.a. with past damage experience and damage expectations for the future. The latter effect can be interpreted as a 'climate adaptation signal' in the flood mitigation behaviour. All other factors remaining equal, a strong belief in a climate-change-induced increase of personal flood damage in the next decades induces an increase of the probability of flood mitigation by more than 10 percentage points. Moreover, strong evidence for moral hazard effects in the flood mitigation behaviour cannot be observed. Households expecting insurance coverage do not reduce their mitigation efforts. Likewise, the expectation of government relief payments hinders mitigation only for some groups of households.

Die Dis cus si on Pape rs die nen einer mög lichst schnel len Ver brei tung von neue ren For schungs arbei ten des ZEW. Die Bei trä ge lie gen in allei ni ger Ver ant wor tung der Auto ren und stel len nicht not wen di ger wei se die Mei nung des ZEW dar.Dis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW.Download this ZEW Discussion Paper from our ftp server:ftp://ftp.zew.de/pub/zew-docs/dp/dp10061.pdf Non-technical SummaryClimate change is seen as a problem facing current and future generations. Two measures exist in order to cope with its potential effects: mitigation and adaptation. Mitigation describes all measures which aim to reduce human based influences on the climate, namely CO 2 and other greenhouse gas emissions. On the contrary, adaptation entails all adjustments in response to actual or expected effects of climate change which serve to reduce harm or exploit potential benefits. While mitigation has been the focus of scientific and political discussions in the past decades, adaptation may become increasingly important as some of the effects of climate change are impending and already irreversible. From an economic point of view, adaptation, contrary to most mitigation options, can also be rational for individuals as they may come to the conclusion that is in their own interest to adapt to new environmental conditions.This study aims to shed light onto some of the factors supporting or hindering individual engagement in adaptation behavior, which little research has empirically investigated to date. In order to analyze behavioral change with regard to climate change, this paper takes on a broader perspective of adaptation, which can be defined as all changes an individual makes in order to adjust to a changing environment. In particular, the effect of information on the perceived risk of individuals was investigated, drawing on a psychological framework called Protection Motivation Theory. Three hypotheses were constructed which were empirically tested in the study: (i) higher levels of perceived risk lead to higher levels of motivation to adapt; (ii) providing information as opposed to not providing information increases perceived risk; (iii) providing locally-focused information as opposed to globally-focused information leads to higher levels of perceived risk.It was found that higher perceived risk did lead to significantly higher motivation to adapt, giving support to hypothesis one. However, hypothesis two and three could not be supported, as the effects of information (compared to no information), and locally-focused information (compared to globally-focused information) on perceived risk were not significant. These results suggest that, contrary to the assumptions in economic theory, the sole provision of information is not sufficient to spur m...

Introduction Climate change is a challenge to societies and economies around the globe. Basically, policy makers have two options to react to climate change: they can try to slow down and possibly halt climate change (mitigation), or they can accept the change and let their economies at least partially adapt to it (adaptation). Both strategies involve costs. On the one hand, carbon abatement requires the usage of new and comparatively expensive technologiesöfor example, renewable energy sources. On the other hand, adjustments to the effects of a changing climate require private and public resourcesö for example, the use of air conditioning and the construction of flood protection systems. An optimal global policy should counterbalance mitigation and adaptation, minimising the sum of costs caused by mitigation, adaptation, and residual damages. Of course, this stylised global perspective has its theoretical pitfalls and practical limits. For example, in the real world, as emphasised by Tol (2005), adaptation and mitigation are done by different people operating at different spatial and temporal scales. Contrary to mitigation, adaptation is mostly a local or regional issue. This hampers the theoretically possible trade-off adaptation and mitigation. Therefore, at the national level adaptation policy can be treated as a field of action independent from mitigation policy that is determined on an international level. Although adaptation has been less prominent than mitigation in the public, scientific, and economic debate for many years, this perception has changed in recent years. There are at least two main reasons for this. First, climate change is already observable andögiven the inertia of the climate systemöwill inevitably intensify (EEA, 2008; IPCC, 2007a). In other words, even if the world does not warm more than 2 8C above preindustrial temperatures, a target proposed by the EU (CEU, 2004), adaptation is necessary. Second, owing to the well-known free-rider incentives in international negotiations on climate policy, the prospect for a binding agreement restricting the world's emissions sufficiently to halt climate change are at least uncertain (Helm, 2008).

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Die Dis cus si on Pape rs die nen einer mög lichst schnel len Ver brei tung von neue ren For schungs arbei ten des ZEW. Die Bei trä ge lie gen in allei ni ger Ver ant wor tung der Auto ren und stel len nicht not wen di ger wei se die Mei nung des ZEW dar.Dis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW. AbstractPublic flood protection cannot totally eliminate the risk of flooding. Hence, private mitigation measures which proactively protect homes from being flooded or reduce flood damage are an essential part of modern flood risk management. This study analyses private flood mitigation measures among German households. The dataset covers more than 6000 households from all parts of the country, including flood plains as well as areas which are typically not at a high risk of riverine flooding. The results suggest that the propensity to mitigate flood damage increases i.a. with past damage experience and damage expectations for the future. The latter effect can be interpreted as a 'climate adaptation signal' in the flood mitigation behaviour. All other factors remaining equal, a strong belief in a climate-change-induced increase of personal flood damage in the next decades induces an increase of the probability of flood mitigation by more than 10 percentage points. Moreover, strong evidence for moral hazard effects in the flood mitigation behaviour cannot be observed. Households expecting insurance coverage do not reduce their mitigation efforts. Likewise, the expectation of government relief payments hinders mitigation only for some groups of households.

Die Dis cus si on Pape rs die nen einer mög lichst schnel len Ver brei tung von neue ren For schungs arbei ten des ZEW. Die Bei trä ge lie gen in allei ni ger Ver ant wor tung der Auto ren und stel len nicht not wen di ger wei se die Mei nung des ZEW dar.Dis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW.Download this ZEW Discussion Paper from our ftp server:http://ftp.zew.de/pub/zew-docs/dp/dp11060.pdf Non-Technical SummaryIt is a common belief that more information about climate change will lead to a better understanding of the phenomenon and to an increase of prevention measures, such as insurance for natural hazards.To test this hypothesis, two independent surveys in Germany were conducted. The survey by the research team of KIT was based on an internet questionnaire and a sample of 510 respondents from all regions and socio-economic groups in Germany. The other survey (by researchers of ZEW) was conducted with 157 respondents which were personally present at the premises of the research institute in Mannheim.The main objective of the analyses was to check the correlations and interactions between knowledge about climate change, scientific information about the phenomenon and the risk perception of climate-induced hazards. Furthermore the links between risk perception and prevention measures were analysed.We found that respondents who revealed a better actual knowledge in questions about climate change perceived climate change impacts as less hazardous than those with weaker knowledge. The impact of actual knowledge is opposed to the effect of the self-declared knowledge of the respondents. Respondents who declared their own level of information about climate change as being rather high showed a higher degree of risk perception of climate change than those who ascribed themselves a lower level of information.Overall, in both surveys independently from each other we identified certain factors determining risk perception. These are: gender (female respondents exhibited higher risk perception), experience of damages through extreme weather events (experience implies higher risk perception), and actual knowledge about climate change (better knowledge implies lower risk perception). Surprisingly, the provision of scientific information about expected climate change impacts showed no significant effect on the risk perception.Furthermore we found a positive effect of risk perception of climate change on the willingness to insure and a significant influence of experience with damages through extreme weather events on insurance coverage.Since information about the consequences of climate change does not lead to increased risk perception, we doubt the efficiency of large-scale public information campaigns. Given the broad coverage of the topic in mass media with partly...

In the aftermath of natural disasters, governments frequently provide financial aid for affected households. This policy can have adverse effects if individuals anticipate it and forgo private precaution measures. While theoretical literature unequivocally suggests this so called "charity hazard", empirical studies yield ambiguous results. Drawing on rich survey data from German homeowners, we analyze charity hazard for different flood precaution strategies and different flood risk areas. Our results indicate a substantial charity hazard in the insurance market for individuals residing in floodprone areas. In contrast, we find a positive correlation between governmental aid and non-financial protection measures. Moreover, our results suggest that insurance and non-financial protection measures are rather complements than substitutes. Finally, we provide suggestive evidence that status-quo bias might play an important role for insurance uptake.

This review summarizes the empirical literature on the effects of natural disasters and weather variations on international trade and financial flows. Regarding the effects on trade, I summarize 21 studies of 18 independent research teams and show that there is a large diversity in terms of motivations, data sets used, methodologies, and results. Still, some overarching conclusions can be drawn. Increases in average temperature seem to have a detrimental effect on export values, mainly on manufactured and agricultural products. Given climate change, this finding is important when it comes to projecting long-term developments of trade volumes. Imports seem to be less affected by temperature changes. Findings on the effects of natural disasters on trade are more ambiguous, but at least it can be concluded that exports seem to be affected negatively by the occurrence and severity of disasters in the exporting country. Imports may decrease, increase, or remain unaffected by natural disasters. Regarding heterogeneous effects, small, poor, and hot countries with low institutional quality and little political freedom seem to face the most detrimental effects on their trade flows. The literature on international financial flows is more limited. This part of the review includes 12 empirical studies. All but one focus on the effect of disasters. The majority of these studies finds that remittances and foreign aid inflows increase slightly after disasters. Potential future research could analyze spillover effects (in terms of time, space, and trade networks), consider adaptation, and use more granular data.