Empirical Studies of the Effect of Flood Risk on Housing Prices

摘要

The Principles and Guidlines for Water and Related Land Resources Implementation Studies (P and G) provide that the reduction of flood damages should not be claimed as a benefit of evacuation or relocation because they are already accounted for in the fair market value of floodplain properties. Corps guidance for implementing the P and G explains further that 'it would be double-counting to also consider the costs of the physical damages.' Yet the assumption that the value of floodplain properties is discounted for flood damages has never been empirically established. This study reviewed existing academic studies and conducted two case studies of hedonic price models. Hedonic price models measure the effect of property attributes upon the overall property value. While the findings are insufficient to show that properties are or are not discounted for flood damages, they show that many attributes affect floodplain property values (e.g., flood insurance, location within the floodplain and income) and that these attributes likely will vary from community to community. These findings bring into question the assumption that all properties are discounted for flood damages.