Risk prevention in cities prone to natural hazards.

Summary Cities located in regions prone to natural hazards such as flooding are not uniformly exposed to risks because of sub-city local characteristics (e.g. topography). Spatial heterogeneity thus raises the issue of how these cities have spread and should continue to develop. The current paper investigates these questions by using an urban model in which each location is characterized by a transport cost to the city center and a risk exposure. Riskier areas are developed nearer to the city center than further away. Investment in building resilience leads to more compact cities. At a given distance to the city center, riskier areas have lower land prices and get lower household density and higher building resilience. Actuarially fair insurance generates optimal density and resilience. An increase of insurance subsidization leads to an increase of density in the riskiest areas and a general decrease of resilience. In this case density restrictions and building codes have to be enforced to limit risk over-exposure.