THE EFFECTS OF FLOODPLAIN DEVELOPMENT CONTROLS ON RESIDENTIAL LAND VALUES

Today's local land-use regulations have considerable influence over urban and ex-urban development. Regulations are being applied in innovative ways for both new and traditional purposes, floodplains - the critical environmental area we examine - make up about 7% of all land in the US. As a result of past floodplain development, floods cause approximately 200 deaths and $9 billion in property damage annually. In this paper we consider the effects of the National Flood Insurance Program (NFIP), a federal effort that requires local governments to regulate floodplain land uses in order to reduce the exposure of property to flood damages and resulting insurance losses. Using the hedonic method to examine land-use policy effects on land as a factor in the production of housing, our results show that zoning floodplains for lower density development, implementing building regulations more stringent than the minimum required by the NFIP, and providing clear local leadership of programs each contribute to lowering floodplain land values. From those findings we conclude that the NFIP is having an effect on land use in localities across the US, but that its effect can be amplified or subverted by local land-use policy decisions. -from Authors