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dc.contributor.authorFarrow, Scott  Concept link
dc.contributor.authorScott, Michael  Concept link
dc.date.accessioned2013-12-04T19:03:22Z
dc.date.available2013-12-04T19:03:22Z
dc.date.issued2013-05-28
dc.identifier.citationWater Resources Research 49 (2013): 2638–2648en_US
dc.identifier.urihttps://hdl.handle.net/1912/6335
dc.descriptionAuthor Posting. © American Geophysical Union, 2013. This article is posted here by permission of American Geophysical Union for personal use, not for redistribution. The definitive version was published in Water Resources Research 49 (2013): 2638–2648, doi:10.1002/wrcr.20217.en_US
dc.description.abstractFloods are risky events ranging from small to catastrophic. Although expected flood damages are frequently used for economic policy analysis, alternative measures such as option price (OP) and cumulative prospect value exist. The empirical magnitude of these measures whose theoretical preference is ambiguous is investigated using case study data from Baltimore City. The outcome for the base case OP measure increases mean willingness to pay over the expected damage value by about 3%, a value which is increased with greater risk aversion, reduced by increased wealth, and only slightly altered by higher limits of integration. The base measure based on cumulative prospect theory is about 46% less than expected damages with estimates declining when alternative parameters are used. The method of aggregation is shown to be important in the cumulative prospect case which can lead to an estimate up to 41% larger than expected damages. Expected damages remain a plausible and the most easily computed measure for analysts.en_US
dc.description.sponsorshipAppreciation is also extended to the John D. and Catherine T. MacArthur Foundation and the Woods Hole Oceanographic Institution for funding.en_US
dc.format.mimetypeapplication/pdf
dc.language.isoen_USen_US
dc.publisherJohn Wiley & Sonsen_US
dc.relation.urihttps://doi.org/10.1002/wrcr.20217
dc.subjectFlooden_US
dc.subjectWillingess to payen_US
dc.subjectProspect theoryen_US
dc.subjectExpected utilityen_US
dc.titleComparing multistate expected damages, option price and cumulative prospect measures for valuing flood protectionen_US
dc.typeArticleen_US
dc.identifier.doi10.1002/wrcr.20217


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