Impact of Behavioral Issues on Green Growth Policies and Weather-Related Disaster Reduction in Developing Countries
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World Bank, Washington, DC
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This paper focuses on how developing
countries can change the way they prepare for disasters so
they are better equipped to sustain economic growth. It
discusses the importance of considering the goals of key
decision makers and the need to understand the perceptions,
systematics biases, and heuristics used by the relevant
interested parties (the affected public, private and public
sector organizations, and nongovernmental organizations) in
choosing between alternatives. The paper highlights the
importance of undertaking benefit-cost analysis to evaluate
disaster risk reduction measures, recognizing that decision
makers might not make meaningful use of this policy tool
given their behavioral biases and simplified heuristics. To
address these issues, the authors propose green growth
strategies that involve multi-year contracts coupled with
short-term incentives that have a chance of being
implemented. The strategies focus on the role of multi-year
micro-insurance, long-term loans, and multi-year catastrophe
bonds that reflect the institutional arrangements in the
developing country. The paper illustrates this proposal in
the case of farmers' agricultural practices and
investment decisions that reduce losses to property from
catastrophic disasters such as drought.
Palabras clave
ACCOUNTING, ADMINISTRATIVE COSTS, AGRICULTURAL PRODUCTION, ASSURANCE, BANKS, BID, BOND, BUDGET CONSTRAINTS, BUDGETING, BUSINESS INTERRUPTION INSURANCE, CAPITAL MARKETS, CATASTROPHE BONDS, CATASTROPHE REINSURANCE, CATASTROPHE RISK FINANCING, CATASTROPHIC LOSS, CATASTROPHIC LOSSES, CLIMATE, CLIMATE CHANGE, CLIMATE RELATED DISASTERS, COMMERCIAL INSURANCE, CONSUMER BEHAVIOR, CONSUMERS, COST ANALYSES, COST ESTIMATES, COUNTRY RISK, COVERAGE, CREDIT RISK, CREDITWORTHINESS, CROP INSURANCE, DAMAGE FROM HURRICANES, DAMAGES, DEFAULT RATE, DEVELOPING COUNTRIES, DEVELOPING COUNTRY, DEVELOPMENT NETWORK, DISASTER, DISASTER AID, DISASTER MITIGATION, DISASTER PRONE AREA, DISASTER REDUCTION, DISASTER RELIEF, DISASTER RISK, DISASTER RISK FINANCING, DISASTER RISK REDUCTION, DISASTERS, DISCOUNT RATE, DISCOUNT RATES, DONOR COMMUNITY, DRAINAGE SYSTEMS, DROUGHT, DROUGHTS, EARTHQUAKE, ECOLOGICAL ECONOMICS, ECONOMIC DEVELOPMENT, ECONOMIC GROWTH, ECONOMIC IMPACT, EMERGING ECONOMIES, EQUIPMENT, EVACUATION, EX ANTE RISK FINANCING MECHANISMS, EXPENDITURE, EXPENDITURES, EXTREME EVENT, EXTREME EVENTS, EXTREME RAINFALL, EXTREME RAINFALL EVENTS, FARMER, FARMERS, FEASIBILITY, FINANCIAL ASSISTANCE, FINANCIAL CONSTRAINTS, FINANCIAL INSTRUMENT, FINANCIAL MANAGEMENT, FINANCIAL MARKETS, FINANCIAL POLICY, FINANCIAL PRODUCTS, FLOOD, FLOOD DAMAGE, FLOOD INSURANCE, FLOODED, FLOODING, FLOODS, FREE ASSETS, GLOBAL REINSURANCE, GROSS DOMESTIC PRODUCT, HEALTH CARE, HOLDING, HUMAN CAPITAL, HURRICANE, HURRICANES, INCOME, INDEMNITY, INSURANCE, INSURANCE COMPANY, INSURANCE CONTRACT, INSURANCE INDUSTRY, INSURANCE POLICIES, INSURANCE POLICY, INSURANCE PREMIUMS, INSURANCE PRODUCT, INSURANCE PRODUCTS, INSURANCE RATES, INSURANCE SCHEME, INSURANCE SCHEMES, INSURER, INSURERS, INTEREST RATE, INTERNATIONAL BANK, INVESTING, INVESTMENT DECISIONS, INVESTMENT STRATEGIES, LABOR PRODUCTIVITY, LAWS, LEGAL PROTECTIONS, LEVEL OF RISK, LIQUIDITY, LIQUIDITY CONSTRAINTS, LOAN, LONG-TERM LOANS, MATURITY, MICRO-FINANCE, MICRO-INSURANCE, MICROCREDIT, MICROINSURANCE, MITIGATION MEASURES, MONEY MARKET, MORAL HAZARD, NATURAL CATASTROPHES, NATURAL DISASTERS, NATURAL HAZARDS, NONGOVERNMENTAL ORGANIZATIONS, PAYMENT OF INTEREST, PENSION, PENSIONS, POLICY ANALYSIS, POLICY IMPLICATIONS, PORTFOLIO, PORTFOLIO RISKS, POTENTIAL INVESTORS, PRICE STABILITY, PROGRAMS, REINSURANCE, REINSURANCE CONTRACTS, REINSURERS, RELIEF, RESERVE, RESERVES, RETURN, RETURNS, RISK AVERSION, RISK EXPOSURE, RISK INSURANCE, RISK MANAGEMENT, RISK MANAGEMENT PROCESS, RISK TRANSFER, SAFETY, SAFETY NET, SECURITIES, SETTLEMENT, SMALL BUSINESSES, TECHNICAL ASSISTANCE, TEMPORARY HOUSING, TERRORISM, TERRORIST, TRADE UNION, TREASURY, TREATIES, VICTIMS, WAR, WEATHER INSURANCE