A Better Way to Promote Household Flood Mitigation and Insurance by Risk Communication

Transcription

1 2015 International Workshop on Typhoon and Flood APEC Experience Sharing on Hazardous Weather Events and Risk Management Taipei, 27 May, 2015 A Better Way to Promote Household Flood Mitigation and Insurance by Risk Communication Yen-lien Kuo Assistant Professor in Department of Economics, National Cheng Kung University

2 ORIGIN Mitigation Guides Evacuation Map Hazard Map Flood Directions Floodgate & Flood Insurance Disaster Images

3 LITERATURE REVIEW 1 Lundgren & McMakin (1998) divided risk communication along functional lines, distinguishing between care communication, crisis communication, and consensus communication. The communication for flood mitigation is care communication - the communication about risks for which the danger and the way to manage it have already been well determined through scientific research that is accepted by most of the audience.

4 LITERATURE REVIEW 2 Berlo s SMCR model (1960) Source Message Channel Receiver Effect Feedback Keller et al. (2006) found that participants who received risk information concerning a longer time period (e.g., 30 years) (larger probability) perceived more danger compared with participants who received risk information for one year. After looking at photographs depicting houses in a flooded region, participants perceived greater risk compared with participants in a control group.

5 LITERATURE REVIEW 3 Zhu et al. (2011) found that, in China, the credibility of earthquake information significantly influenced risk perception. The credibility of word-of-mouth and negative information were positively associated with risk perception. Bell & Tobin (2007) compared 4 descriptive methods of a risk: a 100-year flood; a flood with a 1 percent chance of occurring in any year; a flood with a 26 percent chance of occurring in 30 years; and a flood risk map, but found a disjuncture between understanding and persuasion.

6 THE MODEL OF MITIGATION BEHAVIORS 1 Risk Assessment Hazard Inventory Vulnerability Loss Decision Processes adopted precautions Risk Management Strategies Grothmann and Reusswig (2006) Grossi et al. 2005

7 THE MODEL OF MITIGATION BEHAVIORS 2 Attitude to Risk Perceived probability Threat to life Threat to Property Impact on living quality Fear Worry Income, knowledge, vulnerability, hazard proximity, & adopted precautions (Risk Perception) Attitude to Mitigate Willing to mitigate

8 SURVEY face-to-face surveys May and July Tainan residents Postal communication 27 th June, 2013 communication messages posted Postal surveys 23 rd July, 2013 postal survey 221 replies (38% respond rate) Based on the flood hazard map, 10 flood-prone districts of Tainan City Sinhua, Sinshih, Jiangju, Syuejia, Cigu, Rende, Beimen and Yongkang were chosen to be the survey areas. Residents in flood-prone villages in these 10 districts of Tainan City constituted the survey population. Stratified random sampling was used in this survey, with 5 districts and 30 villages within them being chosen to make up the sample. The respondents in the survey were the major income earners or their spouses and were aged between 20 to 80 years old in the sampled households.

9 RISK COMMUNICATION Hazard and mitigation (A): the guides of floodgate and flood insurance and the hazard map Official flood directions (B): the official flood directions and the evacuation map Disaster images (C) A and C

10 EMPIRICAL ANALYSIS - EFFECTIVENESS EVALUATION WTP for floodgate and insurance 600HH 221HH 2012 WTP 2012 RP & efficacy 2012 HH charact WTP 2012 RP & efficacy HH charact. Self-reported communication message received

11 RISK PERCEPTION - PERCEIVED FLOOD IMPACT Total Variance Explained Component Initial Eigenvalues Extraction Sums of Squared Loadings Total % of Variance Cumulative % Total % of Variance Cumulative % Extraction Method: Principal Component Analysis. 1. Threat to life; 2. Threat to property; 3. Impact on living quality; 4. Fear; 5. Worry.

12 QUESTIONNAIRE Assume that the cost of floodgate is NT$, and a half will be subsidized by the government. Will you pay for it? Assume that the government sets up a public flood insurance which is similar with private insurance - the higher coverage you buy, the higher premium you have to pay. This insurance will compensate your flood damages including damages on properties, shared losses for public utility equipment, the total expense of repairing damaged cars or the value of them, and the cost of clearing and occasional lodging. Assume that the annual premium of your house (which is different from region and floor) is NT$. Will you buy it?

13 THE MODEL OF WILLING TO BUY FLOOD INSURANCE N = 821( ); Cox & Snell R 2 = Est. B S.E, Wald df Sig. Exp(B) Household income Annual premium (10 3 NT$) Perceived flood probability Perceived flood impact Mitigation attitude Insurance efficacy Education Apartment Precautions - observing water level Nearby public flood protection Having sandbags or other barriers Read mitigation messages Constant

14 THE MODEL OF WILLING TO INSTALL FLOODGATE N = 719(1 st floor w/o floodgate); Cox & Snell R 2 = Est. B S.E, Wald df Sig. Exp(B) Household income Cost of floodgate (10 3 NT$) Perceived flood probability Perceived flood impact Mitigation attitude Floodgate efficacy Self-efficacy (applying for a subsidy) Education Precautions - observing water level Nearby public flood protection Read mitigation messages Constant

15 WILLINGNESS-TO-PAY FOR FLOODGATE AND FLOOD INSURANCE The mean max WTP can be estimated by EE max WWWWWW = 1 ββ 1 ln [ee + 1] β 1 is the coefficient of cost/premium (Markandya, Harou, Bellu and Cistulli (2002): pp ) Knowing the flood hazard and mitigations can raise the WTP for annual premium of flood insurance from NT$2646 to NT$4247.

16 EMPIRICAL ANALYSIS EFFECTS ANALYSIS The analysis of communication effects 600HH 221HH 2012 RP 2012 efficacy 2013 RP 2013 efficacy Self-reported communication message received

17 EFFECTIVENESS OF A - HAZARD AND MITIGATION Levene's Test for Equality of Variances t-test for Equality of Means F Sig. t df Sig. (2-tailed) Flood insurance Equal variances efficacy Eq. var. not assumed Equal variances Floodgate efficacy Eq. var. not assumed Perceived Equal variances probability Eq. var. not assumed Threat to life Equal variances Eq. var. not assumed Equal variances Threat to Property Eq. var. not assumed Impact on living Equal variances quality Eq. var. not assumed Fear Equal variances Eq. var. not assumed Worry Equal variances Eq. var. not assumed

18 EFFECTIVENESS OF B - OFFICIAL FLOOD DIRECTIONS Flood insurance efficacy Floodgate efficacy Perceived probability Threat to life Threat to property Impact on living quality Fear Worry Levene's Test for Equality of Variances t-test for Equality of Means F Sig. t df Sig. (2-tailed) Equal variances Eq. var. not assumed Equal variances Eq. var. not assumed Equal variances Eq. var. not assumed Equal variances Eq. var. not assumed Equal variances Eq. var. not assumed Equal variances Eq. var. not assumed Equal variances Eq. var. not assumed Equal variances Eq. var. not assumed

19 EFFECTIVENESS OF C - DISASTER IMAGES Flood insurance efficacy Floodgate efficacy Perceived probability Threat to life Threat to property Impact on living quality Fear Worry Levene's Test for Equality of Variances t-test for Equality of Means F Sig. t df Sig. (2-tailed) Equal variances Eq. var. not assumed Equal variances Eq. var. not assumed Equal variances Eq. var. not assumed Equal variances Eq. var. not assumed Equal variances Eq. var. not assumed Equal variances Eq. var. not assumed Equal variances Eq. var. not assumed Equal variances Eq. var. not assumed

20 EFFECTIVENESS OF A&C Flood insurance efficacy Floodgate efficacy Perceived probability Threat to life Threat to property Impact on living quality Fear Worry Levene's Test for Equality of Variances t-test for Equality of Means F Sig. t df Sig. (2-tailed) Equal variances Eq. var. not assumed Equal variances Eq. var. not assumed Equal variances Eq. var. not assumed Equal variances Eq. var. not assumed Equal variances Eq. var. not assumed Equal variances Eq. var. not assumed Equal variances Eq. var. not assumed Equal variances Eq. var. not assumed

21 CONCLUSION The hazard and mitigation messages can significantly increases the WTP for the floodgate and insurance that may be caused by increasing the risk perception and the efficacy of the flood insurance, respectively. Knowing the flood hazard and mitigations can raise the WTP for annual premium of flood insurance from NT$2646 to NT$4247. Besides increasing mitigation efficacy and the risk perception on flood impacts, the hazard information may increase worry to flood, and combining with disaster images may increase fear to flood. Besides the risk communication, the intention to mitigate or buy insurance will be both increased by the lower cost, perceived flood impact, efficacy, mitigation attitude, and education.