Seminar: A life aquatic: the price of living below sea-level
Tuesday October 22th, Maarten Bosker (EUR) will present 'A life aquatic: the price of living below sea-level'.
Time: 13.00-14.00 hours
Location: CPB-office, Van Stolkweg 14, The Hague
Presentation: Maarten Bosker (EUR)
Discussant: Carel Eijgenraam (CPB)
Language: English
Registration: Please register by sending an email to seminars@cpb.nl.
Abstract subject
Floods, and the fight against them, are a central theme in Dutch history. Today, 36% of the Netherlands would flood if its world-famous river- and sea-defenses would fail. The aim of this paper is to establish the extent to which the Dutch feel safe behind their dykes. We do this by using a revealed-preference approach, and establish whether or not the Dutch are willing to pay to live in areas that will not flood even when the country's defences fail. Using a spatially extremely detailed dataset covering all 470,000 Dutch ZIP-codes, we identify whether houses in flood risk areas cost less than, otherwise equal, homes in "safe" areas. We find that houses in flood risk areas are about 0.5% cheaper than houses without any risk of flooding. This finding implies that the average Dutch person living in a flood prone area expects a flood to occur once every 167 years; much more frequent than the officially stated flood risk levels that the country's defences are supposed to keep up. Also, our estimates reveal the willingness of households to pay for (currently unavailable) flood insurance, and they put a lower bound on public spending to uphold the country's flood defences.
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