Publikationsdatum:
2022-05-25
Beschreibung:
Author Posting. © American Geophysical Union, 2013. This article is posted here by permission of American Geophysical Union for personal use, not for redistribution. The definitive version was published in Water Resources Research 49 (2013): 2638–2648, doi:10.1002/wrcr.20217.
Beschreibung:
Floods are risky events ranging from small to catastrophic. Although expected flood damages are frequently used for economic policy analysis, alternative measures such as option price (OP) and cumulative prospect value exist. The empirical magnitude of these measures whose theoretical preference is ambiguous is investigated using case study data from Baltimore City. The outcome for the base case OP measure increases mean willingness to pay over the expected damage value by about 3%, a value which is increased with greater risk aversion, reduced by increased wealth, and only slightly altered by higher limits of integration. The base measure based on cumulative prospect theory is about 46% less than expected damages with estimates declining when alternative parameters are used. The method of aggregation is shown to be important in the cumulative prospect case which can lead to an estimate up to 41% larger than expected damages. Expected damages remain a plausible and the most easily computed measure for analysts.
Beschreibung:
Appreciation is also extended to the John D.
and Catherine T. MacArthur Foundation and the Woods Hole Oceanographic
Institution for funding.
Schlagwort(e):
Flood
;
Willingess to pay
;
Prospect theory
;
Expected utility
Repository-Name:
Woods Hole Open Access Server
Materialart:
Article
Format:
application/pdf
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