Understanding the effects of past flood events and perceived and estimated flood risks on individuals' voluntary flood insurance purchase behavior

Abstract

Over the past several decades, the economic damage from flooding in the coastal areas has greatly increased due to rapid coastal development coupled with possible climate change impacts. One effective way to mitigate excessive economic losses from flooding is to purchase flood insurance. Only a minority of coastal residents however have taken this preventive measure. Using original survey data for all coastal counties of the United States Gulf Coast merged with contextual data, this study examines the effects of external influences and perceptions of flood-related risks on individuals' voluntary behaviors to purchase flood insurance. It is found that the estimated flood hazard conveyed through the U.S. Federal Emergency Management Agency's (FEMA's) flood maps, the intensities and consequences of past storms and flooding events, and perceived flood-related risks significantly affect individual's voluntary purchase of flood insurance. This behavior is also influenced by home ownership, trust in local government, education, and income. These findings have several important policy implications. First, FEMA's flood maps have been effective in conveying local flood risks to coastal residents, and correspondingly influencing their decisions to voluntarily seek flood insurance in the U.S. Gulf Coast. Flood maps therefore should be updated frequently to reflect timely and accurate information about flood hazards. Second, policy makers should design strategies to increase homeowners' trust in the local government, to better communicate flood risks with residents, to address the affordability issue for the low-income, and better inform less educated homeowners through various educational programs. Future studies should examine the voluntary flood insurance behavior across countries that are vulnerable to flooding.

Predicting support for flood mitigation based on flood insurance purchase behavior

“…To investigate how flood insurance purchase behavior influences individuals' mitigation policy support among the US Gulf Coast residents, we use a comprehensive climate change survey for all coastal counties in the Gulf Coast in 2012 (SM 1). In addition to flood insurance purchase behaviors, the survey includes various questions related to socio-demographic characteristics, perceptions of local climate change, and perceptions of flood-related hazards that may affect mitigation behavior/intention [28][29][30][31][32]. We construct an interconnected Bayesian Network (BN) model to study how these variables jointly affect the support for flood mitigation.…”

“…We also consider the geographic context represented by the percentage of land area of the Special Flood Hazard Area (SFHA) 6 per county. The SFHA is designated by the Federal Emergency Management Agency's (FEMA's) flood map, and it is found to be positively related to perceptions of changing flood amount [32] and voluntary flood insurance purchase behavior [31]. Tenure-the length of residence in the coastal region -indicates exposure to coastal hazards and experience with hazards.…”

“…All the flood mitigation support measures involve the local government. One's trust in local government has positive effects on flood insurance purchase behavior [31] and is hypothesized to affect overall flood mitigation support.…”

Decision Science Perspectives on Hurricane Vulnerability: Evidence from the 2010–2012 Atlantic Hurricane Seasons

“…In the case of hurricanes, Trumbo et al [43] found that during the quiescent three-year period after the 2005 hurricane season, when Katrina and Rita struck, hurricane risk perception declined and optimism bias (believing others are more likely to suffer harm than oneself) increased. Additional evidence of a recency effect on preparation decisions can be found in voluntary flood insurance purchases, which were predicted in one study by peak storm surge heights during the most recent hurricane [44]. The availability heuristic can also make it difficult for people to imagine that future hurricanes may behave differently from past ones (Kates [45] referred to the participants of his study as "prisoners of experience").…”

Examining the Effects of Objective Hurricane Risks and Community Resilience on Risk Perceptions of Hurricanes at the County Level in the U.S. Gulf Coast: An Innovative Approach

“…Recent empirical research has found that peoples' motivation of voluntary risk mitigation and adaptation is low unless actual risk can be perceived (Botzen et al 2009;Kunreuther and Slovic 1978;Kunreuther and Weber 2014;Lindell and Hwang 2008;Shao et al 2017b;Shao et al 2017c). Risk perceptions can influence peoples' willingness to respond to, recover from, and adapt to hurricanes and other extreme events (Hertwig et al 2004;Kasperson et al 1988;Loewenstein et al 2001).…”