Financial Risks Due to Residential Flooding: Incorporating Household Perceptions to Better Understand Behaviors

James I. Price () and Diane Dupont
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James I. Price: University of Wisconsin-Milwaukee

A chapter in Water Risk Modeling, 2023, pp 91-120 from Springer

Abstract: Abstract Canadian homeowners are increasingly vulnerable to flooding, due to elevated levels of indebtedness and more frequent and severe weather events associated with changing climate conditions. This vulnerability imposes risks on the broader Canadian financial system, through its potential effects on mortgage holding institutions, insurance companies, and governments. It is therefore important to understand homeowners’ perceptions of flood risk and their efforts to mitigate against possible flood-related losses. Using data from a 2016 national survey of Canada, this chapter evaluates homeowners’ subjective evaluations of residential flooding risk, their likelihood of purchasing sewer backup and overland flood insurance, and their likelihood of undertaking in-home protective actions. Results show a marked difference in how prior flood experience and socioeconomic factors relate to the likelihood of purchasing flood insurance and the likelihood of undertaking in-home protective actions. These findings help to explain variations in homeowner flood mitigating behavior and offer insights into possible housing asset vulnerability that can inform disaster management policy.

Keywords: Flood risk perceptions; Protection actions; Flood insurance; Household survey; Instrumental variable (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-031-23811-6_4

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DOI: 10.1007/978-3-031-23811-6_4

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