Sorting over flood risk and implications for policy reform

Laura A. Bakkensen, Lala Ma

Research output: Contribution to journalArticlepeer-review

25 Scopus citations

Abstract

Do individuals sort across flood risk? This paper applies a boundary discontinuity design to a residential sorting model to provide novel estimates of sorting across flood risk by race, ethnicity, and income. We find clear evidence that low income and minority residents are more likely to move into high risk flood zones. We then highlight the overall and distributional implications of proposed price and information reforms to the U.S. National Flood Insurance Program. While such reforms are likely welfare increasing overall, heterogeneous behavioral responses yield significant distributive effects that also alter the composition of residents in harm's way.

Original languageEnglish
Article number102362
JournalJournal of Environmental Economics and Management
Volume104
DOIs
StatePublished - Nov 2020

Bibliographical note

Funding Information:
We thank Glenn Blomquist, Trudy Cameron, Tatyana Deryugina, Brian Gerber, Caroline Hopkins, Ben Miller, Daniel Phaneuf, Kathleen Segerson, Leonard Shabman, Christopher Timmins, and Crystal Zhan for their insightful feedback and suggestions. Research conducted in this article by Laura Bakkensen was supported by an Early-Career Research Fellowship from the Gulf Research Program of the National Academies of Sciences, Engineering, and Medicine . The content is solely the responsibility of the authors and does not necessarily represent the official views of the Gulf Research Program of the National Academies of Sciences, Engineering, and Medicine. The authors have no relevant or material financial interests to disclose that relate to this research.

Funding Information:
We thank Glenn Blomquist, Trudy Cameron, Tatyana Deryugina, Brian Gerber, Caroline Hopkins, Ben Miller, Daniel Phaneuf, Kathleen Segerson, Leonard Shabman, Christopher Timmins, and Crystal Zhan for their insightful feedback and suggestions. Research conducted in this article by Laura Bakkensen was supported by an Early-Career Research Fellowship from the Gulf Research Program of the National Academies of Sciences, Engineering, and Medicine. The content is solely the responsibility of the authors and does not necessarily represent the official views of the Gulf Research Program of the National Academies of Sciences, Engineering, and Medicine. The authors have no relevant or material financial interests to disclose that relate to this research.

Publisher Copyright:
© 2020 Elsevier Inc.

Keywords

  • Distributional impacts
  • Flood insurance
  • Flood risk
  • Policy reform
  • Sorting

ASJC Scopus subject areas

  • Economics and Econometrics
  • Management, Monitoring, Policy and Law

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