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Flood Risk Perception in the Housing Market and the Impact of a Major Flood Event

Flood Risk Perception in the Housing Market and the Impact of a Major Flood Event <p>ABSTRACT:</p><p>The impact of flood events on flood risk perception has important implications for policy. Applying a novel dataset featuring the flooding extents from a severe event in Colorado, we disentangle inundated properties from "near misses," defined as structures not directly flooded but located inside the 100-year floodplain. Using a triple-difference hedonic framework, we show that inundated properties inside the floodplain underwent a decrease in price after the flood, while near misses saw a relative price increase. We speculate that inundated properties are perceived as being riskier and near misses relatively less risky, suggesting the possible influence of the availability heuristic or Bayesian learning. <i>(JEL Q54, Q58)</i></p> http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Land Economics University of Wisconsin Press

Flood Risk Perception in the Housing Market and the Impact of a Major Flood Event

Land Economics , Volume 96 (3) – Jul 2, 2020

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Publisher
University of Wisconsin Press
Copyright
Copyright © Board of Regents of the University of Wisconsin System.
ISSN
1543-8325

Abstract

<p>ABSTRACT:</p><p>The impact of flood events on flood risk perception has important implications for policy. Applying a novel dataset featuring the flooding extents from a severe event in Colorado, we disentangle inundated properties from "near misses," defined as structures not directly flooded but located inside the 100-year floodplain. Using a triple-difference hedonic framework, we show that inundated properties inside the floodplain underwent a decrease in price after the flood, while near misses saw a relative price increase. We speculate that inundated properties are perceived as being riskier and near misses relatively less risky, suggesting the possible influence of the availability heuristic or Bayesian learning. <i>(JEL Q54, Q58)</i></p>

Journal

Land EconomicsUniversity of Wisconsin Press

Published: Jul 2, 2020

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