Composite Valuation of Immaterial Damage in Flooding: Value of Statistical Life, Value of Statistical Evacuation and Value of Statistical Injury

Tinbergen Institute Discussion Paper 12-047/3

41 Pages Posted: 28 Apr 2012 Last revised: 4 May 2012

See all articles by Marija Bockarjova

Marija Bockarjova

VU University Amsterdam - Department of Spatial Economics; University of Groningen - Department of Social and Organizational Psychology

Piet Rietveld(Deceased)

affiliation not provided to SSRN; Tinbergen Institute

Erik T. Verhoef

VU University Amsterdam - Department of Spatial Economics; Vrije Universiteit Amsterdam, School of Business and Economics; Tinbergen Institute

Date Written: April 4, 2012

Abstract

This paper enriches existing valuation literature in a number of ways by presenting context-specific estimates of immaterial damage. First, it offers an estimation of value of statistical life (VOSL) in the context of a natural hazard (flooding). Next, as one of the contributions, alongside with less biased estimate of VOSL (euro 6.8 mln) it also provides estimates of the value of statistical injury (VOSI, euro 92,000), and of the value of statistical evacuation (VOSE, euro 2,400). Our estimated indicators are plausible and stay robust throughout various estimations. For flood protection policy in the Netherlands, a higher value of VOSL forthcoming from this research would imply 'underprotection' under current conditions. Another important finding concerns the composition of the total value of immaterial damages, where value of fatalities or value of evacuation may dominate depending on the prevailing floor risk circumstances. This implies that, first, VOSL is not an adequate proxy for immaterial damages since it understates prospective benefits of designated protective measures. Second, spatially differentiated composition of immaterial damages should be explicitly considered to guide policy decisions.

Keywords: cost-benefit analysis, natural hazard, flood risk, stated preferences, choice experiment

JEL Classification: C01, C33, C83, C90, D12, D61, Q51, Q54

Suggested Citation

Bockarjova, Marija and Rietveld(Deceased), Piet and Verhoef, Erik T., Composite Valuation of Immaterial Damage in Flooding: Value of Statistical Life, Value of Statistical Evacuation and Value of Statistical Injury (April 4, 2012). Tinbergen Institute Discussion Paper 12-047/3, Available at SSRN: https://ssrn.com/abstract=2047062 or http://dx.doi.org/10.2139/ssrn.2047062

Marija Bockarjova (Contact Author)

VU University Amsterdam - Department of Spatial Economics ( email )

De Boelelaan 1105
1081HV Amsterdam
Netherlands

University of Groningen - Department of Social and Organizational Psychology ( email )

Grote Kruisstraat 2/1
9700 AH Groningen
Netherlands

Piet Rietveld(Deceased)

affiliation not provided to SSRN

Tinbergen Institute ( email )

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

Erik T. Verhoef

VU University Amsterdam - Department of Spatial Economics ( email )

De Boelelaan 1105
1081HV Amsterdam
Netherlands
+31 020 4446094 (Phone)
+31 020 4446004 (Fax)

Vrije Universiteit Amsterdam, School of Business and Economics ( email )

De Boelelaan 1105
Amsterdam, 1081HV
Netherlands

Tinbergen Institute ( email )

Gustav Mahlerplein 117
Amsterdam, 1082 MS
Netherlands

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