Does National Flood Insurance Program Participation Induce Housing Development?

We estimate the effects on county-wide housing development in Florida of community-level participation in the National Flood Insurance Program using panel data methods and observed variation in the timing of the decision to join the program. We find that program participation increased housing starts and permits in noncoastal counties, while coastal counties with average flood zone acreage saw significant declines in housing activity. We conjecture that loss-mitigating regulatory costs, an obligation of obtaining insurance, might explain these findings.