Adapting to Natural Disasters through Better Information: Evidence from the Home Seller Disclosure Requirement

Seunghoon Lee

No 2402, Working Papers from Department of Economics, University of Missouri

Abstract: While flood damage is determined by both flood intensity and population exposure, the US has predominantly focused on managing the former, with limited success. This paper studies whether a Home Seller Disclosure Requirement can reduce flood exposure and thus flood damage. Leveraging two quasi-experimental variations of the policy, I first show that mandating flood risk disclosure lowers the population living in high-risk areas. Further, using a hydrological measure of flood intensity, I find that it reduces the probability of flood damage by 31 percent. These findings illustrate that easing information frictions can promote voluntary adaptation to natural disasters.

Keywords: Natural disaster; Disclosure; Adaptation; Damage function (search for similar items in EconPapers)
JEL-codes: D83 Q51 Q54 R21 R23 R28 (search for similar items in EconPapers)
Pages: 66 pages
New Economics Papers: this item is included in nep-env and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:umc:wpaper:2402

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