DOES NATIONAL FLOOD INSURANCE PROGRAM PARTICIPATION INDUCE HOUSING DEVELOPMENT?

We estimate the effects on county-wide housing development in Florida of community-level participation in the National Flood Insurance Program using panel data methods and observed variation in the timing of the decision to join the program. We find that program participation 'increased' housing starts and permits in noncoastal counties, while coastal counties with average flood zone acreage saw significant 'declines' in housing activity. We conjecture that loss-mitigating regulatory costs, an obligation of obtaining insurance, might explain these findings.
INTRODUCTION Large-scale government insurance programs, of which there are many in the United States and other developed countries, can have consequences that are undesirable, albeit predictable. By insuring against loss, [...]