Market Value of Mitigation and Perceived Risk: Empirical Results

This paper explores the value of windstorm mitigation in a Gulf Coast city. Policymakers have long assumed that agents will not voluntarily mitigate for a natural disaster. Consequently, policy has focused on coercive measures. Data for the study contains detailed information on the inclusion of storm-blinds, a specific hurricane mitigation feature. Results indicate that homes with storm- blinds command a premium compared to homes without this feature, thereby questioning the assumption held by policymakers. This result, however, is limited to homes located on the island portion of the community indicating that agents differentiate the risk from one area to another.