Natural disasters, land-use, and insurance

Celine Grislain-Letremy and Bertrand Villeneuve

The Geneva Papers on Risk and Insurance Theory, 2019, vol. 44, issue 1, 54-86

Abstract: Abstract This paper addresses the urbanization of areas exposed to natural disasters and studies its dependency on land-use and insurance policies. In practice, we observe simple policies, consisting of a prohibited red zone and a zone without insurance tariff differentiation. Even if there are fixed damages per dwelling, the red-zone policy is relatively efficient; it implements the optimal land-use if the losses are proportional to the surface used. The main results are on the effects redefining the optimal red zone as the climate or the population changes. We expose plausible cases in which the red zone grows with a growing population.

Keywords: Natural disasters; Insurance; Land-use regulation; Climate change (search for similar items in EconPapers)
JEL-codes: G22 Q54 R52 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (1)

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DOI: 10.1057/s10713-018-0032-0

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