Going Toward the Flow: Subsidizing Migration and Development Patterns in Flood Plains
*Names in bold indicate Presenter
The analysis here takes advantage of several features of the empirical setting to robustly identify policy effects. This is particularly important for a program like the CRS, where participation is voluntary and endogeneity may weaken the results. First, we take advantage of natural and exogenous measures of flood risk as well as detailed historical records of local flood events and damage. Second, we construct a panel of local communities nationwide that includes all (participating and non-participating) communities, including those that joined the program late or who adjusted the intensity of the participation during the course of the program. Third, and perhaps most crucially, we leverage design features of the CRS program itself, which awards points for mitigation activities and discounts for surpassing point thresholds. Exploiting the discontinuity in the tiered subsidy design helps us isolate the effect of the subsidy as opposed to other CRS activities. Roughly speaking, this approach allows us to examine changes in migration and housing development trends across three types of communities: non-participants with high flood risks, participants just below point thresholds, and participants just above thresholds. This helps inform the concurrent influences of preexisting background factors, induced community flood preparedness, and subsidized premiums. Preliminary results suggest a rise in migration and development in participating communities receiving greater subsidies, and more development in comparable non-participating communities. In addition to across-community variation in development, we also examine within-community variation (i.e., tracts inside vs. outside flood plains) in responses to subsidized flood insurance.