Valuing Flood Risk Reductions

A choice experiment is used to estimate how Vietnamese households value a flood risk reduction. The empirical analysis is conducted on a sample of households located in the Nghe An Province, one of the provinces which is the most affected by floods in Vietnam. The results reveal that there is a high level of heterogeneity in preferences across households. We compute the willingness to pay (WTP) for a flood risk reduction and we identify how it relates to different attributes of flood management policies (reduction of economic losses, reduction of human losses, political level in charge of implementing the flood management policy). In particular, the marginal WTP for reducing the flood fatality rate, which can be interpreted as the value of statistical life (VSL), varies from 2 517 million VND (approximately 120 818 USD) to 3 590 million VND (approximately 172 323 USD) depending on the model considered. The VSL represents between 77 and 111 times the annual household average income in our sample, a result in line with previous estimates in similar countries