The Economics of Natural Disasters : Concepts and Methods
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Large-scale disasters regularly affect
societies over the globe, causing large destruction and
damage. After each of these events, media, insurance
companies, and international institu-tions publish numerous
assessments of the "cost of the disaster." However
these assessments are based on different methodologies and
approaches, and they often reach different results. Besides
methodological differences, these discrepancies are due to
the multi-dimensionality in disaster impacts and their large
redistributive effects, which make it unclear what is
included in the estimates. But most importantly, the purpose
of these assessments is rarely specified, although different
purposes correspond to different perimeters of analysis and
different definitions of what a cost is. To clarify this
situation, this paper proposes a definition of the cost of a
disaster, and emphasizes the most important mechanisms that
explain and determine this cost. It does so by first
explaining why the direct economic cost, that is, the value
of what has been damaged or destroyed by the disaster, is
not a sufficient indicator of disaster seriousness and why
estimating indirect losses is crucial to assess the
consequences on welfare. The paper describes the main
indirect consequences of a disaster and the following
reconstruction phase, and discusses the economic mechanisms
at play. It proposes a review of available methodologies to
assess indirect economic consequences, illustrated with
examples from the literature. Finally, it highlights the
need for a better understanding of the economics of natural
disasters and suggests a few promising areas for research on
this topic.
Palabras clave
AGRICULTURAL ECONOMICS, AGRICULTURE, ALLOCATION, ASSETS, AVALANCHES, BANKRUPTCY, BUSINESS CYCLES, CHANGES IN PRICES, CLIMATE, CLIMATE CHANGE, CLIMATE CHANGE IMPACTS, CONSTRUCTION WORKERS, CONSUMPTION LOSS, COST ANALYSIS, CRED, DAMAGED HOUSES, DAMAGES, DEBT, DEVELOPMENT ECONOMICS, DEVELOPMENT NETWORK, DEVELOPMENT POLICY, DIRECT VALUE, DISASTER, DISASTER MANAGEMENT, DISASTER PREVENTION, DROUGHT, DROUGHTS, EARTHQUAKE, EARTHQUAKES, ECOLOGICAL ECONOMICS, ECONOMETRIC ANALYSIS, ECONOMETRICS, ECONOMIC EQUILIBRIUM, ECONOMIC GROWTH, ECONOMIC GROWTH RATE, ECONOMIC IMPACT, ECONOMIC IMPACTS, ECONOMIC IMPLICATIONS, ECONOMIC LOSS, ECONOMIC MODEL, ECONOMIC MODELS, ECONOMIC PERFORMANCE, ECONOMIC PERSPECTIVE, ECONOMIC RECOVERY, ECONOMIC RESILIENCE, ECONOMIC SECTORS, ECONOMIC SITUATION, ECONOMIC SYSTEMS, ECONOMIC THEORY, ECONOMIC VALUE, ECONOMICS, EPIDEMIOLOGY, EXOGENOUS SHOCKS, EXPLOSION, EXTERNAL SHOCKS, EXTREME EVENTS, FARMER, FINANCIAL CRISES, FINANCIAL IMPACTS, FINANCIAL RESOURCES, FINANCIAL SUPPORT, FLOOD, FLOOD DAMAGE, FLOOD DAMAGES, FLOODS, FOOD SECURITY, FUTURE RESEARCH, GDP, GENERAL EQUILIBRIUM ANALYSIS, GROWTH RATE, GROWTH THEORIES, HEAT WAVES, HURRICANE, HURRICANE RISK, HURRICANE SEASON, HURRICANES, IMPACT OF DISASTERS, IMPACT OF HURRICANES, IMPORTS, INCOME, INHERITANCE, INSURANCE, INSURANCE COMPANIES, INSURANCE INDUSTRY, INSURERS, INTEREST RATE, INVENTORIES, JOBS, LAND DEGRADATION, LANDSLIDES, LOWER COSTS, MACROECONOMIC SHOCKS, NATURAL DISASTER, NATURAL DISASTERS, NATURAL HAZARDS, NATURAL RESOURCES, OIL PRICES, POLITICAL ECONOMY, POSITIVE EXTERNALITY, PRESENT VALUE, PRICE ELASTICITY, PRICE INCREASE, PRODUCTION FUNCTIONS, PRODUCTIVITY, PROPERTY VALUES, RECONSTRUCTION, REDISTRIBUTIVE EFFECTS, REINSURANCE, RELATIVE PRICE, RELATIVE PRICES, RISK ANALYSIS, RISK ASSESSMENT, RISK MANAGEMENT, SAVINGS, SCENARIOS, SMALL BUSINESS, STORM, STORM SURGE, STORM SURGE RISK, STORMS, SUBSTITUTION, TERRORIST, THUNDERSTORMS, TOTAL COST, TOTAL OUTPUT, TSUNAMIS, UNCERTAINTIES, UNEMPLOYMENT, VALUE ADDED, VICTIMS, VOLCANIC ERUPTIONS, WAR, WATER DISTRIBUTION, WEATHER EXTREMES