Willingness to pay for flood insurance: a case study of Phang Khon, Sakon Nakhon province

Abstract

Prolonged droughts and floods can reduce agricultural productivity and negatively impact businesses in the agriculture and food industries. The prevention and response to floods require both public and private efforts (e.g., “Pay for Flood” insurance) for utmost effectiveness. This study aims to determine the potential factors that influence willingness to pay for flood insurance for the people of Phang Khon District, near the Nam oon Dam, Sakhon Nakorn Province, Thailand, in paying flood insurance. The regression results showed that the height and duration of flooding, house price, and flood damage were crucial factors that triggered the willingness to pay flood insurance. In contrast, having a house with stairs decreased the likelihood of paying insurance. Overall, 11.8% of the respondents were willing to pay for flood insurance at 400 baht per month, and 6.2% were willing to pay at 600 baht per month (6.2%). These respondents consist of farmers and personal business. Nevertheless, these prices are not accepted flood insurance premiums in Thailand. The in-depth expert interviews provided more insight that suggests the possible insurance premium price to be started from 100 baht per month. In addition, this study found that typically many samples would wait for compensation from government support after the flood. This study can contribute to public sectors by guiding governments and insurance providers/companies for flood insurance practice.