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Modeling demand for catastrophic flood risk insurance in coastal zones in Vietnam using choice experiments

Published online by Cambridge University Press:  07 October 2013

Roy Brouwer ,
Bui Duc Tinh ,
Tran Huu Tuan ,
Kristin Magnussen  and
Ståle Navrud
Roy Brouwer
Affiliation:
Department of Environmental Economics, Institute for Environmental Studies, VU University Amsterdam, De Boelelaan 1087, 1081 HV, Amsterdam, The Netherlands. E-mail: r.brouwer@vu.nl
Bui Duc Tinh
Affiliation:
College of Economics, Hue University, Vietnam. E-mail: bdtinh@yahoo.com.sg
Tran Huu Tuan
Affiliation:
College of Economics, Hue University, Vietnam. E-mail: tuantranhuu@yahoo.com
Kristin Magnussen
Affiliation:
Vista Analyse, Norway. E-mail: kristin.magnussen@vista-analyse.no
Ståle Navrud
Affiliation:
School of Economics and Business, Norwegian University of Life Sciences, Norway. E-mail: stale.navrud@umb.no
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Abstract

In a choice experiment, households in Vietnam are offered flood insurance to mitigate increasing catastrophic flood risks due to climate change. Participants are asked to choose their most preferred insurance policy given expected future flood and mortality risks, insurance cover and associated insurance premiums. Although not affordable to everyone, there exists substantial demand for flood insurance. Insurance demand is spatially differentiated, non-linear in flood probabilities and mortality risks, and subject to significant preference heterogeneity. Since respondents are unfamiliar with the concept of flood insurance and education levels are low, choice consistency tests were conducted. These show that choice consistency depends on a combination of respondent characteristics, such as gender and education level, and experimental design characteristics.

Type
Research Article
Information
Environment and Development Economics , Volume 19 , Issue 2 , April 2014 , pp. 228 - 249
Copyright
Copyright © Cambridge University Press 2013 

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Footnotes

This paper is based on a case study carried out under the European Commission 6th Framework Research Programme funded project MICRODIS: Integrated Health Social and Economic Impacts of Extreme Events: Evidence, Methods and Tools (Contract No. GOCE-CT-2007-036877).

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