Participation in the National Flood Insurance Program: An Empirical Analysis for Coastal Properties

A perennial question about the National Flood Insurance Program is: how can participation be increased? An empirical analysis of individual-level data reveals that in a sample of coastal areas the participation rate is 49 percent of eligible properties. Participation responsiveness to price is inelastic, but it has been increased by the mandatory purchase requirements for mortgage borrowers. Easing conditions for participation in the program would probably not reduce flood control measures, such as seawalls, which may degrade beach conditions and coastal ecosystems.