Estimating household preferences for coastal flood risk mitigation policies under ambiguity

Si Ha; Toshio Fujimi; Xinyu Jiang; Nobuhito Mori; Rawshan A. Begum; Masahide Watanabe; Hirokazu Tatano; Eiichi Nakakita

doi:10.1029/2022EF003031

Estimating household preferences for coastal flood risk mitigation policies under ambiguity

Si Ha^*, Toshio Fujimi, Xinyu Jiang, Nobuhito Mori, Rawshan A. Begum, Masahide Watanabe, Hirokazu Tatano, Eiichi Nakakita

^*Corresponding author for this work

Department of Economics

Research output: Contribution to journal › Article › peer-review

7 Citations (Scopus)

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Abstract

Risk mitigation policies (like dike rising) are essential to address increasing coastal flood risks due to global warming. Furthermore, the optimal level of risk mitigation policy should be determined by public preferences for risk reduction. However, it is difficult to reveal public preferences for coastal flood risk reduction because projections of coastal flood risks inevitably involve uncertainty. This study aims to estimate household preference for coastal flood reduction under ambiguity and multiple projections of coastal flood risks. By coupling storm surge inundation simulations and stated preference experiments with decision models, we estimate the expected loss reduction, risk premium, and ambiguity premium for coastal flood risk mitigation policies. The study shows that ignoring the ambiguity premium causes significant undervaluation of coastal flood risk mitigation.

Original language	English
Article number	e2022EF003031
Pages (from-to)	1-15
Number of pages	15
Journal	Earth's Future
Volume	10
Issue number	12
DOIs	https://doi.org/10.1029/2022EF003031
Publication status	Published - Dec 2022

Bibliographical note

Copyright © 2022 The Authors. Earth's Future published by Wiley Periodicals LLC on behalf of American Geophysical Union. Version archived for private and non-commercial use with the permission of the author/s and according to publisher conditions. For further rights please contact the publisher.

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Cite this

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abstract = "Risk mitigation policies (like dike rising) are essential to address increasing coastal flood risks due to global warming. Furthermore, the optimal level of risk mitigation policy should be determined by public preferences for risk reduction. However, it is difficult to reveal public preferences for coastal flood risk reduction because projections of coastal flood risks inevitably involve uncertainty. This study aims to estimate household preference for coastal flood reduction under ambiguity and multiple projections of coastal flood risks. By coupling storm surge inundation simulations and stated preference experiments with decision models, we estimate the expected loss reduction, risk premium, and ambiguity premium for coastal flood risk mitigation policies. The study shows that ignoring the ambiguity premium causes significant undervaluation of coastal flood risk mitigation.",

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AU - Begum, Rawshan A.

AU - Watanabe, Masahide

AU - Tatano, Hirokazu

AU - Nakakita, Eiichi

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Estimating household preferences for coastal flood risk mitigation policies under ambiguity

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