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The Economic Impact of Flood Zone Designations on Residential Property Valuation in Miami-Dade County

Author

Listed:
  • Evelyn G. Shu

    (First Street Foundation, Brooklyn, NY 11201, USA)

  • Jeremy R. Porter

    (Department of Environmental Health Sciences, Mailman School of Public Health, Columbia University, New York, NY 10032, USA)

  • Bradley Wilson

    (First Street Foundation, Brooklyn, NY 11201, USA)

  • Mark Bauer

    (First Street Foundation, Brooklyn, NY 11201, USA)

  • Mariah L. Pope

    (First Street Foundation, Brooklyn, NY 11201, USA)

Abstract

In the United States, flood events are the most economically damaging type of natural disaster. Some of the most widely used tools for understanding property flood risk in the United States are the Flood Insurance Rate Maps (FIRMs) produced by the Federal Emergency Management Agency (FEMA). Numerous previous studies have attempted to estimate the impact on property valuation from a home’s being mapped into a Special Flood Hazard Area (SFHA) within FIRMs. However, as these maps have widely served as the source of data about true flood risk, there have been limits on the ability of researchers to disentangle these zone designation impacts as due to actual flood risk or as due to perceived flood risk. New advancements in flood modeling have allowed for the prediction of high-quality property-level flood inundation, both now and in the future. By integrating these flood modeling advancements, true flood risk may be controlled for in models looking to explore the avenues by which property valuation impacts occur. To this end, this study builds on insights from recent research looking at the valuation of single-family residential properties in Miami-Dade County (MDC), which utilizes a high-resolution floodplain model to estimate the impact of actual property inundation on sales prices. By controlling for actual property flood risk, impacts of SFHA designations are estimated in MDC through implementation of a difference in difference model which utilizes the release of updated FIRMS in 2009 and the 217,222 transactions and 120,693 property designation changes which occurred within the dataset.

Suggested Citation

  • Evelyn G. Shu & Jeremy R. Porter & Bradley Wilson & Mark Bauer & Mariah L. Pope, 2022. "The Economic Impact of Flood Zone Designations on Residential Property Valuation in Miami-Dade County," JRFM, MDPI, vol. 15(10), pages 1-14, September.
    • Handle: RePEc:gam:jjrfmx:v:15:y:2022:i:10:p:434-:d:926386
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    References listed on IDEAS

    as
    1. Bernstein, Asaf & Gustafson, Matthew T. & Lewis, Ryan, 2019. "Disaster on the horizon: The price effect of sea level rise," Journal of Financial Economics, Elsevier, vol. 134(2), pages 253-272.
    2. Ajita Atreya & Susana Ferreira & Warren Kriesel, 2013. "Forgetting the Flood? An Analysis of the Flood Risk Discount over Time," Land Economics, University of Wisconsin Press, vol. 89(4), pages 577-596.
    3. Okmyung Biny & Stephen Polasky, 2004. "Effects of Flood Hazards on Property Values: Evidence Before and After Hurricane Floyd," Land Economics, University of Wisconsin Press, vol. 80(4).
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