Farm impacts of the 2019 Missouri River floods and economic valuation of flood risk reduction

Abstract

The 2019 Missouri River flood caused billions of dollars in damage to businesses, homes, and public infrastructure. Yet little is known about the farm-level effects of this event and farmers' perceptions of its causes. This study reports on the operational and financial setbacks farmers sustained because of the 2019 floods, as well as on their beliefs on the causes of these floods. It further explores farmers' willingness to pay (WTP) to avoid flood risks and the factors that condition it. The empirical application focuses on a sample of approximately 700 Missouri farmers operating near the Missouri River. Results show that yield loss, loss of growing crops, and inability to plant crops were the three most important consequences of flooding. Nearly 40% of the flood-affected farmers reported financial losses of $100,000 or more. Most respondents identified government decision makers as the cause of the 2019 floods, and many believe that government should prioritize flood control over other benefits (recreation and fish and wildlife habitat) the Missouri River system provides. The WTP results show that less than half of the surveyed farmers were willing to pay to avoid flood risks, with an average WTP estimated at $3 per $10,000 value of agricultural land. Subjective but not objective risk exposure influences WTP for flood risk reduction. Other important determinants of WTP are risk aversion, disutility from flood risks, and respondents' age, income, and education. Directions for policy to improve flood risk management in the Missouri River Basin are discussed.

Keywords: Contingent valuation; Flood damages; Missouri river; River flood risk; Willingness to pay.