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Modeling demand for catastrophic flood risk insurance in coastal zones in Vietnam using choice experiments

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  • Brouwer, Roy
  • Tinh, Bui Duc
  • Tuan, Tran Huu
  • Magnussen, Kristin
  • Navrud, Ståle

Abstract

In a choice experiment, households in Vietnam are offered flood insurance to mitigate increasing catastrophic flood risks due to climate change. Participants are asked to choose their most preferred insurance policy given expected future flood and mortality risks, insurance cover and associated insurance premiums. Although not affordable to everyone, there exists substantial demand for flood insurance. Insurance demand is spatially differentiated, non-linear in flood probabilities and mortality risks, and subject to significant preference heterogeneity. Since respondents are unfamiliar with the concept of flood insurance and education levels are low, choice consistency tests were conducted. These show that choice consistency depends on a combination of respondent characteristics, such as gender and education level, and experimental design characteristics.

Suggested Citation

  • Brouwer, Roy & Tinh, Bui Duc & Tuan, Tran Huu & Magnussen, Kristin & Navrud, Ståle, 2014. "Modeling demand for catastrophic flood risk insurance in coastal zones in Vietnam using choice experiments," Environment and Development Economics, Cambridge University Press, vol. 19(2), pages 228-249, April.
    • Handle: RePEc:cup:endeec:v:19:y:2014:i:02:p:228-249_00
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    Citations

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    Cited by:

    1. Yingmei Tang & Huifang Cai & Rongmao Liu, 2022. "Will marketing strategies affect farmers’ preferences and willingness to pay for catastrophe insurance? Evidence from a choice experiment in China," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 24(1), pages 1376-1389, January.
    2. Deely, John & Hynes, Stephen, 2020. "Preferences for Blue-Green or Grey Infrastructure to Reduce Flood Risk: A Choice Experiment," Working Papers 309506, National University of Ireland, Galway, Socio-Economic Marine Research Unit.
    3. Sem J. Duijndam & W. J. Wouter Botzen & Liselotte C. Hagedoorn & Philip Bubeck & Toon Haer & My Pham & Jeroen C. J. H. Aerts, 2023. "Drivers of migration intentions in coastal Vietnam under increased flood risk from sea level rise," Climatic Change, Springer, vol. 176(2), pages 1-22, February.
    4. Toledo-Gallegos, Valeria M. & My, Nguyen H.D. & Tuan, Tran Huu & Börger, Tobias, 2022. "Valuing ecosystem services and disservices of blue/green infrastructure. Evidence from a choice experiment in Vietnam," Economic Analysis and Policy, Elsevier, vol. 75(C), pages 114-128.
    5. Mankaï, Selim & Marchand, Sébastien & Le, Ngoc Ha, 2024. "Valuing insurance against small probability risks: A meta-analysis," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 109(C).
    6. Johannes G. Jaspersen, 2016. "Hypothetical Surveys And Experimental Studies Of Insurance Demand: A Review," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 83(1), pages 217-255, January.
    7. Mark J. Koetse & Roy Brouwer, 2016. "Reference Dependence Effects on WTA and WTP Value Functions and Their Disparity," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 65(4), pages 723-745, December.
    8. Arnaud Reynaud & Manh-Hung Nguyen & Cécile Aubert, 2018. "Is there a demand for flood insurance in Vietnam? Results from a choice experiment," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 20(3), pages 593-617, July.
    9. Lan Anh Nguyen & Manh-Hung Nguyen & Viet-Ngu Hoang & Arnaud Reynaud & Michel Simioni & Clevo Wilson, 2024. "Tourists’ preferences and willingness to pay for protecting a World Heritage site from coastal erosion in Vietnam," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 26(11), pages 27607-27628, November.
    10. Peter John Robinson & W. J. Wouter Botzen, 2018. "The impact of regret and worry on the threshold level of concern for flood insurance demand: Evidence from Dutch homeowners," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 13(3), pages 237-245, May.
    11. Denis Charles & Magali Dumontet & Meglena Jeleva & Johanna Etner, 2024. "Behavioral drivers of individuals’ Term Life Insurance Demand: evidence from a Discrete Choice Experiment," EconomiX Working Papers 2024-23, University of Paris Nanterre, EconomiX.
    12. Vondolia, Godwin K. & Navrud, Ståle, 2019. "Are non-monetary payment modes more uncertain for stated preference elicitation in developing countries?," Journal of choice modelling, Elsevier, vol. 30(C), pages 73-87.
    13. Markus Glatt & Roy Brouwer & Ivana Logar, 2019. "Combining Risk Attitudes in a Lottery Game and Flood Risk Protection Decisions in a Discrete Choice Experiment," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 74(4), pages 1533-1562, December.
    14. repec:cup:judgdm:v:13:y:2018:i:3:p:237-245 is not listed on IDEAS

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