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Economic valuation of flood risk exposure and reduction in a severely flood prone developing country

Published online by Cambridge University Press:  01 June 2009

ROY BROUWER ,
SONIA AKTER ,
LUKE BRANDER  and
ENAMUL HAQUE
ROY BROUWER*
Affiliation:
Institute for Environmental Studies (IVM), Vrije Universiteit, De Boelelaan 1087, 1081 HV, Amsterdam, The Netherlands. Tel.: +31 20 5985608. Email: [email protected]
SONIA AKTER
Affiliation:
North–South University, Department of Economics, Dhaka, Bangladesh
LUKE BRANDER
Affiliation:
Institute for Environmental Studies (IVM), Vrije Universiteit, Amsterdam, The Netherlands
ENAMUL HAQUE
Affiliation:
Economic Research Group, Dhaka, Bangladesh
*
*Corresponding author.
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Abstract

This paper presents the results of a dichotomous choice contingent valuation (CV) study of reduced flood risks in Bangladesh. Sensitivity of willingness to pay (WTP) to varying risk exposure levels is tested in a ‘natural experiment’, targeting floodplain residents facing regular annual flooding and a disaster flood once every five to ten years. Accounting for price, income and education levels, both subjective risk aversion and objective baseline risk exposure affect stated WTP for a common level of flood protection. We find a number of problems with the CV application in this specific developing country context. Half of the respondents are unable to pay in financial terms, but are willing to contribute in kind. The combined use of a monetary and non-monetary measure of WTP would have lowered the number of zero bids considerably. A test-retest carried out six months after the original survey shows that the stated WTP values are reliable.

Type
Research Article
Information
Environment and Development Economics , Volume 14 , Issue 3 , June 2009 , pp. 397 - 417
Copyright
Copyright © Cambridge University Press 2008

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