The Demand for Public Flood Protection under a Compulsory Private Flood Insurance Scheme

Abstract

After the 2021 flood events in Germany, the introduction of compulsory flood insurance was debated. However, insurance coverage for private buildings and belongings may undermine the willingness to pay for municipal flood protection. We use a discrete choice experiment (N = 5,940 participants) to analyze the effects of compulsory insurance on the preferences for public flood protection. The demand for municipal flood protection is associated with its effectiveness and cost and varies plausibly with numerous covariates but is unaffected by compulsory insurance. Hence, there is no empirical indication that compulsory flood insurance would undermine citizens’ support for public flood-risk reduction.