The Impact of Grants on Homeowner Decisions to Retrofit to Reduce Hurricane-Induced Wind and Flood Damage

An increasing number of national, state, and local programs have offered grants or other monetary incentives to encourage homeowners to retrofit their homes to reduce damage from natural hazard events. Despite this fact, little is known about how these offerings influence a homeowner's decision to carry out such structural retrofits. This paper studies the impact that different grant program designs in particular have on the decision to undertake different types of retrofits to mitigate against hurricane damage. Using data from a survey of homeowners in the eastern half of North Carolina, we implement a mixed logit model that allows for the combination of both revealed-preference and stated-preference data available from the survey. Our findings show that offering a grant results in households being, on average, 3 times as likely to retrofit as when a grant is not offered. In addition, both the percentage of retrofit cost and the maximum dollar amount covered by the grant have a substantial impact on the probability that households choose to retrofit. Living closer to the coastline also has a significant impact on the probability that households will choose to retrofit. Counter to some previous research, we find that households who have experienced two or more hurricanes are less likely to choose to retrofit their homes. From our research, we find that the percentage of retrofit cost covered by the grant and the total cost are both important factors when deciding on the best grant program configuration.