Climate Risk and Beliefs in New York Floodplains

Matthew Gibson and Jamie T. Mullins

Journal of the Association of Environmental and Resource Economists, 2020, vol. 7, issue 6, 1069 - 1111

Abstract: Applying a difference-in-differences framework to a census of residential property transactions in New York City 2003–17, we estimate the price effects of three flood risk signals: (1) the Biggert-Waters Flood Insurance Reform Act, which increased premiums; (2) Hurricane Sandy; and (3) new floodplain maps reflecting three decades of climate change. Estimates are negative for all three signals, and some are large: properties included in the new floodplain after escaping flooding by Sandy experienced 11% price reductions. We investigate possible mechanisms, including selection of properties into the market and residential sorting. Finding no evidence for these, we develop a parsimonious theoretical model that allows decomposition of our reduced-form estimates into the effects of insurance premium changes and belief updating. Results suggest the new maps induced belief changes comparable to those from insurance reform.

Date: 2020
References: Add references at CitEc
Citations: View citations in EconPapers (44)

Downloads: (external link)
http://dx.doi.org/10.1086/710240 (application/pdf)
http://dx.doi.org/10.1086/710240 (text/html)
Access to the online full text or PDF requires a subscription.

Related works:
Working Paper: Climate Risk and Beliefs in New York Floodplains (2020)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ucp:jaerec:doi:10.1086/710240

Access Statistics for this article

More articles in Journal of the Association of Environmental and Resource Economists from University of Chicago Press
Bibliographic data for series maintained by Journals Division ().