Research Paper

Flood Risk and the U.S. Housing Market

November 1, 2018

Authors Carolyn Kousky Susan Wachter Michael LaCour-Little

Current Themes

Flood Risk and the U.S. Housing Market -- title page

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Overview

This working paper explores the significant impact of flood risk on the U.S. housing market. Flooding is the most frequent and costliest natural disaster in the United States, with future risks predicted to increase due to climate change and development in high-risk areas. The paper examines the effectiveness of current flood risk management strategies, including FEMA's flood maps and the National Flood Insurance Program (NFIP), and suggests directions for future research and action to mitigate flood-related damages and financial risks.

Key Message

Flooding is predicted to become an even greater threat to the U.S. housing market due to climate change and ongoing development in high-risk areas. Current flood risk management, primarily through FEMA flood maps and the NFIP, is insufficient in addressing the full extent of the risk. Improving the accuracy of flood hazard maps, developing property-specific risk scores, and encouraging comprehensive flood insurance coverage are critical steps in mitigating future flood damage. These measures, along with better risk communication and economic incentives, are essential for enhancing community resilience and reducing financial risks associated with floods.