Research

The Price of Risk: Flood Insurance Premium Reform and Local Development

The climate is changing rapidly. Globally, trillions of dollars of housing wealth is at risk of flood damage, putting billions of people in harm’s way. In many countries, federally administered flood insurance programs are the primary tool that policy-makers employ to influence coastal development and mitigate flood damages. I study the design of federal flood insurance programs in the United States, using data on the universe of tax parcels in Florida and North Carolina. For identification, I leverage a 2021 reform to the rate calculation methodology of the National Flood Insurance Program (NFIP), which more tightly linked prices to actual underlying flood risk. I find that increasing flood insurance premiums causes declines in new development. My findings suggest the existence of substantial moral hazard prior to the reform, and emphasize the importance of accurately pricing risk for avoiding the worst economic—and human—costs of climate change.

Draft can be found here.

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Suburban Poverty: Causes and Consequences of the Changing Geography of American Poverty  (with Michael Neubauer)