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Abstract

We employ a two-stage random utility model (RUM) to estimate people’ marginal willingness to pay (WTP) for enhancing community-level floodplain management activities reflected in the National flood insurance program (NFIP)’s Community Rating System (CRS) program. CRS is a voluntary program, which provides the participating communities with discounts on flood insurance premium in exchange for strengthened flood protection activities. Results show that people with different demographics react differently to flood risk and generally value flood protection activities. We find that among the CRS program activities, people place the highest value on activities concerning repetitive flood loss reduction, with the second highest being public information disclosure about flood risk. In addition, results suggest that people significantly value structural mitigation projects such as flood- and debris- control dams. Importantly, our results suggest that water body as an amenity measure is perceived positively in people’s location choices, nonetheless flood risk information disclosure diminishes the amenity value.

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