Bounded rationality, climate risks, and insurance: Is there a market for natural disasters?

W. J.Wouter Botzen, Jeroen C.J.M. van den Bergh

Research output: Contribution to journalArticleResearchpeer-review

47 Citations (Scopus)

Abstract

This paper examines the role of insurances to reduce uncertainty associated with climate change losses for individuals. Of special interest is the value individuals place on the reduction of increased flood risks by insurance coverage. Using rank-dependent utility and prospect theories, risk premiums are estimated under different climate change scenarios for the Netherlands. The study delivers two main insights. First, estimation results suggest that a profitable flood insurance market could be feasible. Second, climate change has the potential to increase the profitability of offering flood insurance. © 2009 by the Board of Regents of the University of Wisconsin System.
Original languageEnglish
Pages (from-to)265-278
JournalLand Economics
Volume85
Issue number2
DOIs
Publication statusPublished - 11 Jun 2009

Fingerprint Dive into the research topics of 'Bounded rationality, climate risks, and insurance: Is there a market for natural disasters?'. Together they form a unique fingerprint.

  • Cite this