Does National Flood Insurance Program Participation Induce Housing Development

The objective of this study is provide estimates of the economic effects of the National Flood Insurance Program. In particular, we estimate the response of countywide housing development in Florida to community-level participation in the program, and find that housing permits and starts were up to 30 percent higher in member communities compared to non-members. This increase in development is driven by housing activity in non-coastal counties; we find no evidence that housing construction increased in coastal counties where greater flooding is expected. We speculate that higher compliance costs explain this result, but further research is needed to verify this claim.