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.