Potential for Application of a Probabilistic Catastrophe Risk Modelling Framework to Poverty Outcomes
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World Bank, Washington, DC
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This paper analyzes the potential to
combine catastrophe risk modelling (CAT risk modeling) with
economic analysis of vulnerability to poverty using the
example of drought hazard impacts on the welfare of rural
households in Ethiopia. The aim is to determine the
potential for applying a derived set of damage
(vulnerability) functions based on realized shocks and
household expenditure/consumption outcomes, onto a
forward-looking view of drought risk. The paper outlines the
CAT risk modeling framework and the role of the
vulnerability module, which describes the response of an
affected exposure to a given hazard intensity. The need to
explicitly account for different household characteristics
that determine vulnerability within our model is considered,
analogous to how a CAT risk model would differentiate damage
functions for buildings by different classes of
construction. Results for a regression model are presented,
estimating ex-post drought impacts on consumption for
heterogeneous household types (e.g. with cattle, safety-net
access, illness). Next, the validity/generalizability of the
derived functions are assessed, to infer applicability of
the derived relationships within a CAT risk modelling
framework. In particular, the analysis focuses on external
validity: whether the relationships established in the
dataset can be used for forecasting outside of the sample
used for analysis. The model is stress-tested using
statistical methods of resampling. This involves randomly
splitting the data into “training” and "testing"
datasets. The tests show consistency of results across the
datasets. Finally, future plans are outlined with regard to
developing a fuller catastrophe risk model to combine with
the consumption results.
Palabras clave
POVERTY THRESHOLD, LIVING STANDARDS, RISKS, HOUSEHOLD SIZE, HOUSEHOLD SURVEY, POVERTY LINE, ECONOMIC GROWTH, STORM, EARLY WARNING, FARMER, WIND SPEED, FOOD CONSUMPTION, INCOME, SCHOOLING, POVERTY RATES, HOUSEHOLD CONSUMPTION, TOTAL POVERTY, AGRICULTURAL DEVELOPMENT, VULNERABILITY ASSESSMENT, NATURAL CATASTROPHES, DEATH, FOOD POLICY, POOR PEOPLE, CHILD LABOUR, DISASTER, SOLAR RADIATION, MEASURES, POVERTY ASSESSMENT, HURRICANES, REGION, INSURANCE COMPANY, POVERTY ANALYSIS, POVERTY INDICATOR, CROP YIELD, SAVINGS, CROP PRODUCTION, TSUNAMI, RURAL HOUSEHOLDS, HOUSEHOLD HEAD, INSURANCE MARKETS, POVERTY GAP, FLOODS, GEOGRAPHICAL REGIONS, VULNERABILITY‐ ASSESSMENT, FOOD PRICE, SHEEP, REGIONAL RESULTS, PUBLIC SAFETY, NATURAL HAZARD, NATURAL DISASTERS, HOUSEHOLD COMPOSITION, HOUSEHOLD FACTORS, FORECASTING, HOUSEHOLD INCOME, TYPHOON, DISASTERS, CONSUMPTION EXPENDITURE, INSURERS, FARMERS, DISASTER EVENT, FAMINE, COVARIATE SHOCKS, HOUSEHOLD HEADS, CLAIMS ASSESSMENT, INSURANCE CONTRACTS, UNEMPLOYMENT, REINSURANCE, CROP YIELDS, INFANT MORTALITY, DROUGHTS, CONSUMPTION, HUMAN CAPITAL, TROPICAL CYCLONE, EARTHQUAKE, RISK ASSESSMENT, FLOOD DAMAGE, FOOD SECURITY, DISASTER REDUCTION, DISASTER RISK, CLIMATE CHANGE, DROUGHT, ECOLOGICAL ZONES, NATURAL HAZARD, BANK, EXTREME EVENTS, INSURANCE CONTRACTS, FOOD CONSUMPTION, FLOOD DAMAGE, SAFETY NET, CLAIMS ASSESSMENT, DAMAGE, IMPACT OF SHOCKS, IMPACT OF DISASTERS, SMALLHOLDER FARMERS, RURAL, FLOOD, CROP LOSSES, PRODUCTION FUNCTION, DIVERSIFICATION, IDIOSYNCRATIC SHOCKS, INSURANCE, RURAL POLICY, SAFETY‐NET, REGIONS, PRODUCTION SYSTEMS, HURRICANE, IRRIGATION, RISK, FOOD CROPS, POVERTY, DROUGHT RISK, VULNERABILITY TO POVERTY, ABSOLUTE TERMS, CLIMATE CONDITIONS, PHYSICAL DAMAGE, HOUSEHOLD CONSUMPTION, AGRICULTURAL PRODUCTIVITY, RISK MANAGEMENT, IMPACT EVENTS, HOUSEHOLD WELFARE, HOUSEHOLDS WITH LIVESTOCK, POOR, WELFARE MONITORING, POVERTY ASSESSMENT, DISASTER RISK, WELFARE MEASURE, ASSET SALES, FOOD PRICES, CHILD LABOUR, CLIMATIC REGION, SAFETY, ECONOMIC GROWTH, RISK ASSESSMENT, POVERTY ANALYSIS, ENVIRONMENTAL DISASTER