Climate change is projected to increase the frequency and severity of natural hazards, which requires adaptation policies. Individuals can take measures that reduce their exposure to, or purchase insurance against, natural hazard risks. The proposed research examines individual decision making under very low-probability, high-impact (uncertain) climate change risks. In particular, empirical evidence will be collected using surveys and experiments in order to explain heterogeneity in flood insurance demand and subjective weighting or neglect of low flood probabilities. Moreover, this study aims to identify cost-effective measures that individuals can take to limit flood-induced consequences, and the factors of influence on decisions to invest in such measures. This research aims to assess whether short- or long-term economic incentives provided by insurance can stimulate investments in risk reduction.
Contact information: Dr. Wouter Botzen