Tsunami Risk and Information Shocks: Masters Final Oral Examination : February 19 2020, 1:00 pm
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Amila Hadziomerspahic
Understanding risk perceptions of
natural disasters is critical to understanding behavioral responses of
individuals and adaptive capacity of communities. Developed coastlines
experience risk from a myriad of sources with different frequency and intensity,
such as flooding, storm surges, and sea-level rise. In Oregon, there is an
additional risk to coastal areas with high severity but very low frequency: the
Cascadia Subduction Zone earthquake and tsunami. Using regulatory hazard lines
and two recent information shocks for identification, this paper investigates
the impact of tsunami risk information on coastal residents’ risk perceptions,
as capitalized into coastal property prices. Using a difference-in-differences
hedonic framework, I find inconclusive evidence that regulatory lines or
information shocks capitalized into house prices. This potential null result finding
suggests that the risk of a severe but low frequency Cascadia event is either not
salient to homeowners or it is not salient enough to translate into current
housing market decisions. Either case is suggestive of a market failure to
internalize risk, which may contribute to coastal communities being chronically
under-prepared for such an event.