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Title page
Contents
Abstract 2
1. Introduction 4
2. Urban economic theory 7
2.1. Principles 7
2.2. Functional forms and equilibrium 8
2.3. Introducing floods in the urban economy model 9
2.4. Introducing flood management options 10
3. Impact of floods on a city's equilibrium: The study of three strategies 12
3.1. Determination of welfare and landowners' profits in the absence of floods 12
3.2. Determination of welfare, landowners' profits and insurance costs with insurance 12
3.3. Determination of welfare and landowners' profits with land use zoning 15
3.4. Comparing outcomes for the three flood management strategies 15
4. Numerical results 18
4.1. Trade-off between damages from floods and housing costs 18
4.2. Optimal strategy and distance to second best 21
4.3. What is the second-best option? 24
5. Conclusions 26
Acknowledgments 27
References 28
Appendix A: The equilibrium in the closed city system with public ownership of land (ccp) and endogenous housing structure 30
Appendix B: Comparison of outcomes across policies 32
Appendix C: Calibration of the model on the Paris agglomeration 32
Table 1. Nomenclature 7
Table 2. Annually destroyed capital per household expressed in percentage of income in the three flood management options for various flood characteristics, assuming in all cases... 19
Table 3. Variation between subsidized and risk-based premium insurance for Landowners's profits (LO) and Tenants's rents (T) in flood prone and safe areas for various flood return... 21
Figure 1. Representation of flood-prone and safe areas in the urban area. Flood-prone zones are not confined to a location but are distributed homogeneously in terms of distance... 10
Figure 2. Invested capital density in safe (left) and flood prone areas (right) as a function of the distance to the city center with the three flood management options. In this example,... 20
Figure 3. Total built housing surfaces (left) and housing rents (right) as a function of the distance to the city center for the three flood management options. In this example, floods... 20
Figure 4. Comparing risk-based premium insurance to other flood management options for an estimated damage to buildings of 40%. Top left: as a % of household utility; Top right:... 23
Figure 5. Subsidized insurance and land use zoning each lead to higher household utilities depending on flood characteristics 24
Figure 6. Households' utility variation between subsidized insurance and land use zoning for flood event that destroy 40% of structures in flood-prone areas 25
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