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Flood Hazards, Insurance Rates, and Amenities: Evidence From the Coastal Housing Market

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  • Okmyung Bin
  • Jamie Brown Kruse
  • Craig E. Landry

Abstract

This study employs the hedonic property price method to examine the effects of flood hazard on coastal property values. We utilize Geographic Information System data on National Flood Insurance Program flood zones and residential property sales from Carteret County, North Carolina. Our results indicate that location within a flood zone lowers property value. Price differentials for flood risk and the capitalized value of flood insurance premiums are roughly equivalent—both exhibiting a nonlinear relationship in flood probability. Our results support the conclusion that flood zone designation and insurance premiums convey risk information to potential buyers in the coastal housing market.

Suggested Citation

  • Okmyung Bin & Jamie Brown Kruse & Craig E. Landry, 2008. "Flood Hazards, Insurance Rates, and Amenities: Evidence From the Coastal Housing Market," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 75(1), pages 63-82, March.
    • Handle: RePEc:bla:jrinsu:v:75:y:2008:i:1:p:63-82
    DOI: 10.1111/j.1539-6975.2007.00248.x
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