Private Flood Mitigation in Germany: Effects of Experience, Expectations, and Information
Abstract
Floods are a major natural hazard and cause substantial material and human losses, which will only be aggravated by climate change. Germany is no exception from this trend. In this context, technical and behavioural measures... [ view full abstract ]
Floods are a major natural hazard and cause substantial material and human losses, which will only be aggravated by climate change. Germany is no exception from this trend. In this context, technical and behavioural measures on the household level to reduce or avoid flood damage gain more relevance. Policymakers try to foster such private flood mitigation measures and the uptake of flood insurance by information, incentives and regulations. We investigate whether the uptake of private flood mitigation measures is affected by (a) the experience of a major flood event in June 2013, (b) the perceived flood insurance coverage, and (c) public information campaigns focussing on flood hazards. We use a novel longitudinal dataset of more than 3,300 households from all parts of Germany and employ a difference-in-differences approach for analysing the impacts of flood experience, insurance coverage and information campaigns on flood mitigation. The results show that households who have directly experienced the flood of 2013 have increased their flood mitigation efforts, while non-affected households in the same counties did not change their behaviour. Households who state a change in their insurance status and report themselves as being insured mitigate more, not less. This contradicts the expectation of moral hazard (that insured households engage less in mitigation measures than comparable non-insured households) and suggests that insurance and mitigation are rather seen as complements than substitutes. Public information campaigns show no measurable effect on the flood mitigation behaviour of German households, which poses questions about the effectiveness of such large-scale and general information and awareness campaigns. These results are relevant for the debate on compulsory flood insurance in Germany. In light of low insurance take-up-rates, compulsory insurance was suggested as a way to increase resilience against floods and avoid public ad-hoc-relief after major floods. Important arguments against a compulsory insurance scheme include moral hazard concerns and the potential of increasing voluntary insurance demand by public information campaigns. In tendency, our results refute these arguments and therefore support the idea of compulsory flood insurance.
Authors
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Alina Philippi
(RWTH Aachen)
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Daniel Osberghaus
(Centre for European Economic Research (ZEW))
Topic Areas
Learning from major events , Evidence to inform risk relevant policy
Session
T2_D » Floods 1 (11:00 - Tuesday, 21st June, CB3.1)
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