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Quantifying the impacts of climate-driven flood risk changes and risk perception biases on coastal urban property values ; A case study for the North Carolina coastal zone

Waard, Johan de (2015) Quantifying the impacts of climate-driven flood risk changes and risk perception biases on coastal urban property values ; A case study for the North Carolina coastal zone.

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Abstract:Between 1991 and 2010, hurricanes and tropical storms were the biggest cause of property losses, causing 44% of all disaster related property destruction in the U.S. The projected growth in population of coastal counties, with the accompanying rise in coastal asset value, in combination with the impacts of the expected ongoing climate change poses an ever growing financial liability to the U.S. taxpayer and coastal resident. Since housing is a major source of collateral for the financial system, being able to simulate property values may help reveal the true risk of future climate change to financial institutions. However, the market value of these houses is influenced by the risk perception bias of buyers who operate in the market. This research focusses on these subjects affecting coastal urban property values and are reflected in the research objective: “To quantify the impacts of climate change, and the effect of the associated flood risks and risk perception bias on coastal urban property values at the North Carolina coastal zone.” First, the impacts of climate change on Beaufort (Carteret County, North Carolina, U.S.) for the year 2050 is downscaled from the global climate change scenarios. Carteret County is one of the counties most often hit by a hurricane and as it is situated on the coastal plain, regional sea level rise and changing hurricane frequencies will be the focus of the climate change impacts. The regional sea level rise for the year 2050 is less than 30 cm, this is too small to be used during this study and is therefore omitted. For Carteret County the dominant source of flooding are wind driven storm surges associated with hurricanes. Under climate change conditions the current 100 year storm will have a return period of 61 years by 2050 and the current 500 year storm will be more than twice as likely to occur in 2050 with a decreased return period of 231 years. Second, divided into three subjects, risk will be explored by taking a look at objective risk, subjective risk, and the risk perception bias procedure. The objective risk is either the current flood risk probability, as determined by the Federal Emergency Management Agency, or the hurricane return period under climate change. Housing market actors will assess objective flood risk on the basis of probability and severity of damage, this is the subjective risk, and will be biased by myopia and amnesia. The risk perception bias procedure is started by a flood event, over a period of 5 years the bias declines logarithmically from its maximum to its minimum level. Third, four scenarios were developed to help achieve the research objective. Scenario 1 and 2 both operate under objective risk and without and with climate change conditions respectively. Scenario 3 and 4 operate under subjective risk and without and with climate change conditions respectively. The four scenarios are monitored for four flood zones, for each of these flood zones the total trade volume, average trade price, and the number of trades are recorded. Whilst the number of trades remains constant across the different scenarios, the total trade volume and average trade price can be as much as 20 percent lower due to the impacts of climate change and risk perception bias. Finally, recommendations are made for future research. The relation between hurricane intensity and storm surge levels for Carteret county as well as adding hurricane wind damage as a starting point for the risk perception bias should be the subject of future research.
Item Type:Essay (Master)
Faculty:ET: Engineering Technology
Subject:56 civil engineering
Programme:Civil Engineering and Management MSc (60026)
Link to this item:http://purl.utwente.nl/essays/67194
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