This paper describes residential development and location choice within a community subject to future natural hazards of uncertain severity. This is accomplished by constructing an equilibrium model of housing markets where locations are differentiated by both risk of loss due to natural hazards...

Federal relief and insurance programs for households living in areas subject to natural disasters have evolved in the absence of private insurance. Conventional wisdom suggests that these programs serve only to subsidize those choosing to live in hazardous areas at the expense of the taxpaying...