Coastal community hazard mitigation and community rating system of NFIP

Storm force flooding continues to be a major concern in the hurricane season and causes considerable loss to the coastal communities. National Flood Insurance Program (NFIP) provides recovery resources for the flood disaster and dissuades uneconomic uses from locating in flood hazard area. In order to motivate flood insurance purchase and promote increased flood hazard mitigation, the Community Rating System (CRS) that is a part of NFIP, credits 18 community floodplain management activities. However, CRS has been marked by a lack of active participation since its inception limiting its potential effectiveness. As of January 2008, 1080 communities, representing only 5% of all the NFIP communities have enrolled in CRS. Little empirical evidence exists to shed light on what factors influence the establishment of local hazard mitigation projects. To fill this gap, we propose to analyze flood hazard mitigation projects in 37 North Carolina coastal counties between 2002 and 2008. Specifically, we will examine the influence of physical, risk, and socioeconomic factors on coastal community hazard mitigation decisions as reflected in the CRS score. Ultimately, our project will forge a better understanding of community decision making, as related to natural hazards. (PDF contains 4 pages

MODELING THE DECISION TO BUY FLOOD INSURANCE: AN EMPIRICAL ANALYSIS FOR COASTAL AREAS

A perennial question about the NFIP is: how can participation be increased? An empirical analysis reveals that in coastal areas the voluntary participation rate is only nine percent and identifies important determinants of the insurance purchase decision. It suggests that insurance will not discourage undesirable risk management practices in coastal areas.Risk and Uncertainty,

AN ECONOMIC EVALUATION OF BEACH EROSION MANAGEMENT ALTERNATIVES

This paper examines the relative economic efficiency of three distinct beach erosion management policies — beach nourishment with shoreline armoring, beach nourishment without armoring, and shoreline retreat. The analysis focuses on (i) the recreational benefits of beaches, (ii) the property value effects of beach management, and (iii) the costs associated with the three management scenarios. Assuming the removal of shoreline armoring improves overall beach quality, beach nourishment with shoreline armoring is the least desirable of the three alternatives. The countervailing property losses under a retreat strategy are of the same order of magnitude as the foregone management costs when the beneficial effects of retreat — higher values of housing services for those houses not lost to erosion — are considered. The relative desirability of these alternative strategies depends upon the realized erosion rate and how management costs change over time.Resource /Energy Economics and Policy,

EXPANDING THE NATIONAL FLOOD INSURANCE PROGRAM TO COVER COASTAL EROSION DAMAGE

The National Flood Insurance Program does not currently cover damage strictly attributable to coastal erosion. This paper uses the results of a nationwide survey of coastal property owners to estimate the demand for such insurance. We find that there is significant demand at prices in the range of current flood insurance premiums. Demand is influenced in the hypothesized way by increased measures of erosion risk as well as by insurance price and income.Land Economics/Use, Risk and Uncertainty,

COSTS OF COASTAL HAZARDS: EVIDENCE FROM THE PROPERTY MARKET

A hedonic price model suggests that flooding and erosion hazards, and the actions taken against them, are major determinants of property values in American coastal areas. A zoning ordnance against new construction within the 60-year erosion hazard area would increase property values and perhaps conserve the coastal ecosystem.Environmental Economics and Policy, Land Economics/Use,

Field Experiments on Anchoring of Economic Valuations

A pillar of behavioral research is the view that preferences are constructed during the value elicitation process, but it is unclear whether, and to what extent, such biases influence real market equilibria. This paper examines the “anchoring” phenomenon in the field. The first experiment produces evidence that inexperienced consumers can be anchored in the value elicitation process, yet there is little evidence that experienced agents are influenced by anchors. The second experiment finds that anchors have only transient effects on prices and quantities traded: aggregate market outcomes converge to the intersection of supply and demand after a few market periods.field experiment, anchoring, valuation, experience

Some Consumer Surplus Estimates for North Carolina Beaches

We estimate consumer surplus of a beach day using the single-site travel cost method. Onsite visitation data for seven North Carolina beaches were collected between July and November of 2003. Two pooled count data models, corrected for endogenous stratification and truncation, are estimated to account for bias stemming from onsite sampling. One model pertains to beach visitors that make single day trips to the beach, while the other is for visitors that stay onsite overnight. In each model, we allow for heterogeneity across sites through intercept-shifting and demand slope-shifting dummy variables. Depending upon the site, the estimated net benefits of a day at a beach in North Carolina range between $11 and$80 for those users making day trips and between $11 and$41 for those users that stay onsite overnight. These estimates are of the same order of magnitude as the results from earlier studies using travel cost methods but are considerably larger than the previous findings based upon stated preference methods.travel cost, consumer surplus, beach access, Resource /Energy Economics and Policy, D12, D63, H31, Q26,

Wind Turbines and Coastal Recreation Demand

We examine the impact of coastal wind turbines on coastal tourism and recreation for residents of the northern CAMA counties in North Carolina. A combination of telephone and web survey data are used to assess the impact of coastal wind farms on trip behavior and site choice. Most of the respondents to our telephone survey claim to support offshore wind energy development, and independent survey data suggest that the observed levels of support may be indicative of the broader population in this region. Overall, we find very little impact of coastal wind turbines on aggregate recreational visitation; loss in consumer surplus associated with wide spread wind development in the coastal zone is insignificant at $17 (or about 1.5$55 per household. On average, we find no evidence of aversion to wind farms 4 miles out in the ocean, or for wind farms located in coastal estuaries. For all wind farm scenarios, we find evidence of preference heterogeneity– some respondents find this appealing while others find it aversive. Key Words: Recreation demand, tourism, renewable energy

Going Home: Evacuation-Migration Decisions of Hurricane Katrina Survivors

In the wake of Hurricane Katrina, many evacuees from the Gulf region began the difficult process of deciding whether to rebuild or restart elsewhere. We examine pre-Katrina Gulf residents’ decision to return to the post-disaster Gulf region—which we call the “return migration” decision. We estimate two separate return migration models, first utilizing data from a mail survey of individuals in the affected region and then focusing on self-administered questionnaires of evacuees in Houston. Our results indicate that return migration can be affected by household income; age; education level; employment, marital and home ownership status; but the results depend upon the population under consideration. We find no impact of “connection to place” on the return migration decision. While the impact of income is relatively small, we find that the real wage differential between home and host region influences the likelihood of return. Larger implicit costs, in terms of foregone wages for returning, induce a lower likelihood of return. Exploiting this difference at the individual level, we are able to produce estimates of willingness to pay to return home. Average WTP to return home for a sample of relatively poor households is estimated at $1.94 per hour or$3,954 per year.

The Effects of Nutrition Package Claims, Nutrition Facts Panels, and Motivation to Process Nutrition Information on Consumer Product Evaluations

In a laboratory experiment using a between-subjects design, the authors examine the effects on nutrition and product evaluations of nutrition claims made (e.g., 99% fat free; low in calories ) on a product package, product nutrition value levels, and enduring motivation to process nutrition information. Enduring motivation is shown to moderate the effects of product nutrition value on consumer evaluations. Also, nutrition claims interact with product nutrition value in affecting consumer perceptions of manufacturer credibility. Given the availability of nutrient levels in the Nutrition Facts panel on the back of the mock package, nutrition claims on the front of the package generally did not affect positively consumers\u27 overall product and purchase intention evaluations. The authors discuss some implications of these findings, suggestions for further research, and study limitations