Measuring Heterogeneous Price Effects for Home Acquisition Programs in At‐Risk Regions

• DOI: 10.1002/soej.12341
• Publication Date: 2019-03-08T16:36:00Z
• Authors: Eugene Frimpong; Jamie Kruse; Gregory Howard; Rachel Davidson; Joseph Trainor; Linda Nozick
• Keywords: 1. No poverty; 0211 other engineering and technologies; 02 engineering and technology

Any entity offering flood insurance, whether it is private or government‐administered such as the National Flood Insurance Program (NFIP), faces challenge of solvency. This especially true for NFIP, where homeowner affordability criteria limit opportunity to charge fully risk‐based premiums. One solution remove highest risk properties from insurer's book business. Acquisition (buyout) flood‐prone structures a potentially permanent that eliminates while providing homeowners with financial assistance relocate in less risky location. To encourage participation, are offered preflood fair market value their damaged (or at damage) structures. Although many factors have been shown affect homeowner's decision accept an acquisition offer, very little research has devoted influence price monetary incentive on homeowners' willingness participate programs. We estimate pooled probit model and employ bootstrap methodology determine effects hypothetical home offers decisions. do so controlling environmental factors, property characteristics, sociodemographic characteristics. Results show indeed positive effect likelihood accepting contract. Furthermore, estimated supply curves differ significantly based damage status well