"Moral hazard, risk perception, social vulnerability and adaptation to floods and climate change"

Abstract :
Individuals are in general reluctant to voluntarily invest in measures which limit damage costs from natural disasters and climate change. The moral hazard hypothesis argues that insured individuals take fewer other preparedness measures based on their assumption that their losses will be covered anyway. Conversely, the advantageous selection hypothesis argues that individuals view insurance and other risk reduction measures as complements. While home adaptation to flooding is positively associated with comprehensive insurance coverage, socially vulnerable communities have lower levels of self-protection and risk knowledge, and consequently are implementing lower levels of adaptation to floods and climate change. Social vulnerability is a measure of the sensitivity of a population to climate change impacts and its ability to respond to and recover from the impacts of environmental hazards. It is considered to mirror the geographies of inequality. As public agencies are increasingly seeking tools to understand inequity in exposure and decide distribution of prevention funds, aggregated indicators of vulnerability are being considered as equity measures. However, such indices rely on single-axis frameworks with the underlying assumptions that a deficit in one dimension of vulnerability can be offset (or compensated) by a surplus in another. The bedrock assumption in risk communication that positively links risk communication to risk awareness and risk-mitigating behaviour has to be challenged. There are many reasons why at-risk people may not act on risk information. Elevated awareness of risks does not always translate into adaptive actions because individuals may not have access to the necessary resources. For vulnerable communities, the message does not resonate with their lived reality or they are too preoccupied with daily needs.