Economic valuation of victims’ mental damage in flood disaster

This paper proposes a methodology for the valuation of mental damage caused by a flood disaster using the contingent valuation method (CVM) and analysis of covariance structures. The unobserved mental discomfort of the victims of a flood disaster is expressed quantitatively as a structural concept, which is used as the explanatory variable of the victims´ utility function in order to measure their mental damage. The structural concept of the mental damage, which is considered as a negative local public good, is regarded as the production structure of the victims´ stresses from the analysis of covariance structures. The applicability of the methodology presented in this paper is investigated using data collected from a flood disaster that occurred in Toyooka, Japan.