Dependence of flood risk perceptions on socioeconomic and objective risk factors

Abstract

[1] This study examines flood risk perceptions of individuals in the Netherlands using a survey of approximately 1000 homeowners. Perceptions of a range of aspects of flood risk are elicited. Various statistical models are used to estimate the influence of socioeconomic and geographical characteristics, personal experience with flooding, knowledge of flood threats, and individual risk attitudes on shaping risk belief. The study shows that in general, perceptions of flood risk are low. An analysis of the factors determining risk perceptions provides four main insights relevant for policy makers and insurers. First, differences in expected risk are consistently related to actual risk levels, since individuals in the vicinity of a main river and low-lying areas generally have elevated risk perceptions. Second, individuals in areas unprotected by dikes tend to underestimate their risk of flooding. Third, individuals with little knowledge of the causes of flood events have lower perceptions of flood risk. Fourth, there is some evidence that older and more highly educated individuals have a lower flood risk perception. The findings indicate that increasing knowledge of citizens about the causes of flooding may increase flood risk awareness. It is especially important to target individuals who live in areas unprotected by dike infrastructure, since they tend to be unaware of or ignore the high risk exposure faced.

Influence of flood risk characteristics on flood insurance demand: a comparison between Germany and the Netherlands

“…In 1998 this binding decree was changed into advice in order to comply with European competition laws (Faure, 2006). Nevertheless, at present there are no major Dutch insurers that offer an insurance policy against flood damage (Botzen et al, 2010). 3 An exception is a "catastrophe risk" insurance policy that has been available since September 2012 and provides coverage against terrorism risk, earthquakes and flooding.…”

“…2). van den Bergh, 2008), while a compulsory public-private natural disaster insurance has been discussed for Germany (Schwarze and Wagner, 2007). It is, therefore, of interest to arrive at insights into whether sufficient demand exists for the proposed flood insurance in the Netherlands, and whether natural disaster insurance in Germany should be made compulsory.…”

“…2 Apart from the potential damage of river flooding, damage caused by the overtopping or failure of coastal protection may result in catastrophic damage in the Netherlands of up to C 100 billion or more (Aerts et al, 2008).…”

“…Hence, decision-making on safety standards does not follow a uniform path but is driven by many individual political decisions in the different states. Flood protection standards are between 1/1250 and 1/10 000 (near the coast) in the Netherlands (Aerts et al, 2008). Flood protection standards in the Netherlands were determined after the major flood disaster in 1953 and these standards were guided by a cost-benefit analysis (van Dantzig, 1956).…”

“…An explanation for this behaviour is that these individuals neglect the low-probability flood risk. But it has also been observed that many people overestimate lowprobability high-impact risk, and purchase insurance against such risk even if premiums are considerably above the expected loss (McClelland et al, 1993;Botzen and van den Bergh, 2009;Laury et al, 2009). These behavioural biases, which are rooted in prospect theory, may be less severe in the case of medium-probability medium-impact flood risk (Botzen and van den Bergh, 2009).…”