Factors that influence household decision-making on property-level flood protection investment: Insights from a stated preference study

Abstract

Extreme rainfall events have been increasing in their severity and frequency, posing a greater flood risk to Canadian homeowners than ever before. As a result, the expected benefits of property-level defensive actions to protect against flooding are growing, particularly in older and high-risk homes. The objective of this research was to understand the decision-making process concerning household investment in property-level flood protection (PLFP) measures, analyze whether specific PLFP devices were beneficial from a household perspective, and learn which factors were most salient to household choice. Data were collected through a survey of households in mature neighbourhoods in Edmonton, Alberta, Canada. The principal method used was stated preference to elicit the homeowners’ willingness-to-pay (WTP) for two PLFP devices: backwater valves and sump pump systems. The design included varying monetary incentives to understand their impact on consumer choice. In addition to preferences, the survey collected information on several factors that were deemed likely to influence choice regarding investment in flood protection, including risk perceptions and prior flood experience. Results showed that the average market cost to purchase and install these devices was higher than the average WTP of households in our sample. Through econometric analysis we found that choice to purchase PLFP was influenced by monetary incentives, risk perceptions, and the belief that protective measures will work to protect a home from flooding.