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Willingness to pay for Flood Insurance in the Mekong River Delta

(A thesis submitted in partial fulfilment of the requirements for the degree of MASTER OF ARTS IN DEVELOPMENT ECONOMICS, VIETNAM – THE NETHERLANDS PROGRAMME FOR M.A IN DEVELOPMENT ECONOMICS)

By Nguyen Ngoc Que Anh (VNP 21)

Academic Supervisor: Dr. Truong Dang Thuy



In the circumstance of climate change and series of dams built in Mekong River Basin, risk of flood damages in Mekong River Delta tend to be ambiguous and unpredictable. Based on the data obtained from survey in Mekong River Delta in 2015, Choice Experiment is applied to assess the stated preference and the willingness to pay for flood insurance of local farmers. Local farmers are willing to pay for the flood insurance covering more than flood damages and provided by corporation. They are also willing to share the burden with providers. WTP for attributes and the WTP for specific insurance package are calculated, WTP levels are very high. Besides, we also evaluate the probability of levels of WTP for flood insurance with differ levels of important attributes. The potential development of insurance companies is very bright, especially corporation. The profitability will be large, if the provider provide insurance packages with favorite policy.

Keywords: willingness to pay, flood insurance, Mekong River Delta

Abbreviations: BDT-Bangladeshi Taka; CE - Choice Experiment; CLL - Conditional Log Likelihood Function; CVM - Contingent Value Method; GIS - Geographic Information System; IFRC - International Federation Red Cross; IPCC - The Intergovernmental Panel on Climate Change; LL - Log Likelihood Function; MRD - Mekong River Delta; MRC - Mekong River Commission; OLS - Ordinary Least Squares; RUM - Random Utility Model; VND - The Vietnamese Dong; USD - The United States Dollar; WTP -Willingness to Pay.

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Full version is available at Library of Vietnam-Netherland Progamme: 1A Hoang Dieu, Phu Nhuan Dist, Ho Chi Minh city, Vietnam.