Journal article
Flood insurance reforms, housing market dynamics, and adaptation to climate risks
Journal of housing economics, Vol.62, p.101953
12/01/2023
DOI: 10.1016/j.jhe.2023.101953
Abstract
This paper examines the impact of two nationwide reforms to the National Flood Insurance Program on both flood insurance and property markets. The 2012 and 2014 reforms aimed to phase out subsidies on flood insurance premiums. Using a difference-in-differences framework comparing treated and similar but untreated properties, we find that the reforms led to a 14.3% relative increase in the price of flood insurance, an 8.2% decrease in insurance demand, a 4.2% decrease in property prices and a 2.3% decrease in property transaction volumes. As flood risk continues to accelerate across the United States, properly pricing insurance premiums can effectively discourage households from living in risky areas, but may involve potential trade-offs such as the unintended outcome of a large drop-off in insurance coverage.
•Recent reforms in the National Flood Insurance Program caused (i) 14.3% increase in the price of insurance (ii) 9% increase in insurance demand (iii) 4.4% decrease in property prices (iv) 2.3% decrease in property transaction volumes.
Details
- Title: Subtitle
- Flood insurance reforms, housing market dynamics, and adaptation to climate risks
- Creators
- Hannah Hennighausen - University of Alaska AnchorageYanjun Liao - Resources For The FutureChristoph Nolte - Boston UniversityAdam Pollack - Boston University
- Resource Type
- Journal article
- Publication Details
- Journal of housing economics, Vol.62, p.101953
- DOI
- 10.1016/j.jhe.2023.101953
- ISSN
- 1051-1377
- eISSN
- 1096-0791
- Publisher
- Elsevier Inc
- Language
- English
- Date published
- 12/01/2023
- Academic Unit
- School of Earth, Environment, and Sustainability
- Record Identifier
- 9985113010602771
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