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Vulnerability and Policy Response: Unintended Consequences

Georgic, Will Cameron
http://orcid.org/0000-0002-7632-8032
http://rave.ohiolink.edu/etdc/view?acc_num=osu1563450002509178

Abstract Details

2019, Doctor of Philosophy, Ohio State University, Agricultural, Environmental and Developmental Economics.
There are three general methods for enhancing flood risk resiliency and reducing expected damages: insurance, protection, and retreat. In the United States, the policy portfolio associated with each approach can stand substantial improvement and examples of shortcomings are numerous. In this dissertation, I use models of land use and spatial equilibrium to inform methods of causal inference in order to analyze observed responses to policies aimed at reducing vulnerability. I then offer insights which could help guide improved policies moving forward. Chapters 2 through 4 of this dissertation address economic behavior in response to a unique policy or approach associated with either insurance, protection, or retreat. In Chapter 2, I estimate whether homeowners pay more for homes which are eligible for subsidized and discounted flood insurance premiums. Using an exogenous break in subsidy eligibility specified in the original legislation, I estimate nationwide and metro region specific difference-in-differences models to identify the capitalization of subsidy eligibility in home values. Given the well-known finding that flood insurance uptake is imperfect in 100-year floodplains and in accordance with the predictions of a hedonic model with asymmetric information, I find a rate of capitalization within the bounds of outcomes resulting from fully informed market participants and from buyers and sellers with heterogeneous awareness, averaging approximately $12,000 per eligible residence. I further find that during a temporary removal of subsidies in 2012-2014, the capitalization of subsidies diminished, providing additional evidence of my causal mechanism, and supporting the most recent, pertinent legislation, The Homeowners Insurance Affordability Act of 2014. In Chapter 3, I use the development patterns in southeastern and central Florida following the Flood Control Act of 1948 to estimate the impact of discrete levee construction on rates of housing development with a fixed effect Poisson regression and a nonlinear difference-in-differences identification strategy. I find that newly constructed levees increased the rate of residential development by over 50 percent. Extending my analysis to the 21st century, I use a duration model to characterize the optimal stopping decision inherent to land conversion and a control function to account for price endogeneity, and I find that the protection provided by levees creates a lasting effect on residential development patterns. In Chapter 4, I estimate the capitalization of proximity to floodplain property buyouts and I show that accounting for spillovers from vulnerable property acquisitions significantly changes the cost-benefit calculation, potentially permitting more generous offers to be made. Using a novel and exhaustive dataset for housing transactions in Harris County, Texas, I find that a 200 meter reduction in the distance to the nearest buyout is associated with a $365 increase in the price of the average home. However, this average effect masks important heterogeneity, suggesting that positive effects are likely in higher quality neighborhoods while negative effects are possible in lower quality neighborhoods. Overall, in addition to answering questions of critical policy importance, I uncover a pattern of unintended consequences, most of which are counterproductive with regard to the stated goals of the respective intervention.
H. Allen Klaiber (Advisor)
Sathya Gopalakrishnan (Committee Member)
Tim Haab (Committee Member)
140 p.
Environmental Economics
Flood; Land Use; Policy; Quasi-Experiment

Recommended Citations

Citations

  • Georgic, W. C. (2019). Vulnerability and Policy Response: Unintended Consequences [Doctoral dissertation, Ohio State University]. OhioLINK Electronic Theses and Dissertations Center. http://rave.ohiolink.edu/etdc/view?acc_num=osu1563450002509178

    APA Style (7th edition)

  • Georgic, Will. Vulnerability and Policy Response: Unintended Consequences. 2019. Ohio State University, Doctoral dissertation. OhioLINK Electronic Theses and Dissertations Center, http://rave.ohiolink.edu/etdc/view?acc_num=osu1563450002509178.

    MLA Style (8th edition)

  • Georgic, Will. "Vulnerability and Policy Response: Unintended Consequences." Doctoral dissertation, Ohio State University, 2019. http://rave.ohiolink.edu/etdc/view?acc_num=osu1563450002509178

    Chicago Manual of Style (17th edition)

osu1563450002509178
366
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