The Willingness to Pay for Flood Insurance

Abstract

Flooding is the natural disaster that causes the most damage. Post-flood, many families are not insured and do not have sufficient savings for rebuilding and governmental aid can be limited. We undertake, using a stated preference survey, the first willingness-to-pay (WTP) elicitation for flood insurance in the U.S. WTP increases with modeled flood risk and flood risk perceptions. WTP for residents in our study area’s 100-year floodplain is 47% to 59% of the median flood insurance premium, which suggests the need for financial assistance for families that are at risk of flood damage and are unable to afford risk-based premiums.