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How Global Warming Can Affect Where People Live? Evidence from Flood Surprises

Petkov, Ivan (2018): How Global Warming Can Affect Where People Live? Evidence from Flood Surprises.

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This paper challenges the notion that changes in flood risk will have a minimal impact on population because of the availability of insurance and that most of the effect, if any, will be borne out by the real estate market. Insurance premiums even when subsidized are a cost that a household will need to pay with the increase in flood risk. The evidence suggests that flood events, historical and contemporaneous, play a role in the determination of the local perceived flood risk. Attractive communities that have positive growth before the flood surprise are hardest hit. They see a persistent 1.4\% dip in population with a 0.7\% decrease in the pre-flood trend. Flooding does not affect population in the rest of the high surprise locations. Instead, they see close to 4\% drop real estate values with the biggest effect among higher tier housing. There is also evidence that flood incidence in these communities is higher among the low-income population as suggested by relief payments by FEMA.

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