Analysis Modeling national flood insurance policy holding at the county scale in Florida, 1999–2005 ☆ Sammy Zahran a, ⁎, Stephan Weiler b, 1 , Samuel D. Brody c,2 , Michael K. Lindell d,3 , Wesley E. Highfield c,4 a Department of Sociology, Colorado State University, B235 Clark Building, Fort Collins, CO, 80523-1784, United States b Department of Economics, Colorado State University, Fort Collins, CO, 80523-1771, United States c Environmental Planning and Sustainability Research Unit, Department of Landscape Architecture & Urban Planning, Texas A&M University, College Station, TX 77843-3137, United States d Department of Landscape Architecture and Urban Planning, Texas A&M University, College Station, TX 77843-3137, United States abstract article info Article history: Received 4 November 2008 Received in revised form 6 April 2009 Accepted 20 April 2009 Available online 18 May 2009 Keywords: National Flood Insurance Program Florida Flood mitigation Community rating system Flood risk Moral hazard JEL classification: H76 Q58 R52 We analyze household flood insurance purchases in Florida from 1999 to 2005, and the extent to which household insurance purchases correspond with flood mitigation activities by local governments involved in the Federal Emergency Management Agency's (FEMA) Community Rating System (CRS). Regression results indicate that household flood insurance purchases correlate strongly with local government mitigation activities, adjusting for hazard experience, hazard proximity, and community demography. Policy implications of this observed relationship are discussed, assuming four temporal order and floodplain development scenarios, with particular attention to the congruence of outcomes relative to policy objectives. © 2009 Elsevier B.V. All rights reserved. 1. Introduction Although flood insurance statistics are well-monitored, little is known on why household flood insurance purchasing behavior varies spatially and temporally. This research problem is particularly relevant because FEMA has historically encountered problems encouraging communities and their residents to participate in the National Flood Insurance Program's (NFIP) Community Rating System (CRS). Our study addresses this issue by investigating household flood insurance purchases in Florida from 1999 to 2005, and the extent to which household insurance purchases correspond with flood mitigation activities by local govern- ments involved in FEMA's CRS program. Specifically, we analyze annual counts of flood insurance policy holders for every local jurisdiction in Florida participating in the CRS. Using multivariate statistical models, we isolate the effect local government mitigation activities on flood insurance taking, adjusting for hazard experience, hazard proximity, and demographic variables. Results from our study provide useful information on conditions that explain local variation in the decision to buy flood insurance. Such knowledge can be used by flood managers to increase policy holding in vulnerable areas, perhaps improve the effectiveness of the CRS program, and avoid the significant potential for unintended consequences that are directly antithetical to the goals of the program itself. The following section details our theoretical intuition on the relationship between CRS-incentivized mitigation activities and flood insurance purchasing behavior, as well as highlights existing literature on household adjustments to environmental hazards, particularly flood insurance purchases. Next, we describe our sample selection, variable measurement, and data analysis procedures. Results are reported in two phases. First, we examine policy holding over the study period using descriptive statistics and GIS-derived maps. Second, we analyze a series of Prais-Winsten regression panel models that longitudinally predict variation in policy counts. Then, we interpret our findings and discuss Ecological Economics 68 (2009) 2627–2636 ☆ This article is based on research supported in part by the U.S. National Science Foundation Grant No. CMS 0346673 and SES 0527699. The findings and opinions reported are those of the authors and are not necessarily endorsed by the funding organizations or those who provided assistance with various aspects of the study. ⁎ Corresponding author. Tel.: +1 970 4911877(Office); fax: +1 970 491 2191. E-mail addresses: szahran@colostate.edu (S. Zahran), Stephan.Weiler@colostate.edu (S. Weiler), sbrody@archmail.tamu.edu (S.D. Brody), mlindell@archone.tamu.edu (M.K. Lindell), highfield@tamu.edu (W.E. Highfield). 1 Tel.: +1 970 491 5538. 2 Tel.: +1 979 458 4623. 3 Tel.: +1 979 862 3969. 4 Tel.: +1 979 845 7813. 0921-8009/$ – see front matter © 2009 Elsevier B.V. All rights reserved. doi:10.1016/j.ecolecon.2009.04.021 Contents lists available at ScienceDirect Ecological Economics journal homepage: www.elsevier.com/locate/ecolecon