Motivating Costly Action in the Face of Climate Change: Hurricane Sandy and Flood Insurance (With Jamie T. Mullins)
Abstract
The purchase of flood insurance represents a costly action that individuals can take to mitigate a portion of the financial risks posed by climate change. Understanding what drives such preemptive actions is vital for fostering widespread adaptation and mitigation efforts. In this paper, we examine the extent to which experiencing a major flood event -- Hurricane Sandy in New York City -- led to increased flood insurance uptake, shedding light on what motivates individuals to undertake costly risk-mitigating actions. Using a difference-in-difference framework with address-level flood insurance data, we assess the effect of varying experiences with Hurricane Sandy on residential insurance uptake. Our findings reveal that properties directly inundated were 7.1 to 10.4 percentage points (34% to 50%) more likely to purchase flood insurance following Sandy. Those that were very near but not directly inundated saw only a 2.6 percentage point increase. This response quickly falls to zero as the distance from direct harm increases. Taken together, these findings suggest that populations may only be motivated to take action after experiencing direct harm. This presents a significant challenge for those advocating preemptive action in the face of climate change.
Keywords: climate change, flood risk, beliefs, flood insurance, New York City, Hurricane Sandy
Udugama, G. K., & Mullins, J. T. (2024). Valuing the Disamenity of Open Dumpsites: A Sri Lankan Case Study. The Journal of Environment & Development, 0(0). https://doi.org/10.1177/10704965241251627
Abstract
Disposal of municipal solid waste in open dumpsites remains widespread throughout the developing world. While harm to local environments and public health may seem apparent, the lack of credible estimates of damages from open dumpsites is a major reason for their continued use. This paper estimates the disamenity damages imposed by an open dumpsite in Colombo, Sri Lanka, on nearby property owners using hedonic regression methods and a novel data set collected for the purpose. We find that property values increase by 10% for every additional 100 m of distance from the edge of the dumpsite and thus provide the first credible estimate of costs imposed by open dumping in a developing country. As open dumpsites are often sited in less affluent areas, our results suggest that such sites are likely exacerbating urban inequities in urban agglomerations across the developing world.
Keywords: open dumping, municipal solid waste, externality, hedonics
Work in Progress
The Effect of Weather Extremes on Recreational Use: Evidence From the US Army Corps Lakes (With David A. Keiser)
Abstract
Climate change is expected to have far-reaching effects on economic growth and overall well-being of society. While recognizing the significant progress made in the scientific literature on climate change in recent years, there remains significant uncertainty as to how climate change would affect particular non-market goods or services such as recreation. In this paper, we try to obtain causal estimates of how weather influences recreational use by leveraging a first-of-its-kind data source containing monthly visitation data over 14 years at lakes managed by the United States Army Corps: the country's largest water-based outdoor recreation provider. Our analysis shows increased precipitation leads to fewer lake visits, with sharper declines under heavier rainfall. Warmer temperatures initially increase visits, but this effect diminishes significantly at very high temperatures.
Keywords: recreation, climate change, non-market valuation, Army Corps lakes