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Planning for natural disasters in a stochastic world

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  • Lester Lave
  • Jay Apt

Abstract

We examine the risks and management of natural disasters. A benefit-cost framework focuses attention on (1) designing control structures, such as dams and levees, and mitigation policies, such as construction standards, to protect lives and property against small and medium, rather than large sized natural disasters; and (2) warning and evacuation to save lives for large natural disasters. Providing information rather than command solutions generally enhances social benefits, if people understand the risks and bear the expected costs. Requiring actuarially fair insurance simultaneously provides information and has individuals bear the expected costs. Copyright Springer Science + Business Media, LLC 2006

Suggested Citation

  • Lester Lave & Jay Apt, 2006. "Planning for natural disasters in a stochastic world," Journal of Risk and Uncertainty, Springer, vol. 33(1), pages 117-130, September.
    • Handle: RePEc:kap:jrisku:v:33:y:2006:i:1:p:117-130
    DOI: 10.1007/s11166-006-0174-9
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    References listed on IDEAS

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    2. Iris Grossmann & M. Morgan, 2011. "Tropical cyclones, climate change, and scientific uncertainty: what do we know, what does it mean, and what should be done?," Climatic Change, Springer, vol. 108(3), pages 543-579, October.
    3. Raghav Gaiha & Kenneth Hill & Ganesh Thapa & Varsha S. Kulkarni, 2013. "Have natural disasters become deadlier?," Global Development Institute Working Paper Series 18113, GDI, The University of Manchester.
    4. Qin Fan & Meri Davlasheridze, 2016. "Flood Risk, Flood Mitigation, and Location Choice: Evaluating the National Flood Insurance Program's Community Rating System," Risk Analysis, John Wiley & Sons, vol. 36(6), pages 1125-1147, June.
    5. Raghav Gaiha1 & Kenneth Hill & Ganesh Thapa, 2012. "Have Natural Disasters Become Deadlier?," ASARC Working Papers 2012-03, The Australian National University, Australia South Asia Research Centre.
    6. Thomas Gries & Natasa Bilkic, 2014. "Investment under Threat of Disaster," Working Papers CIE 77, Paderborn University, CIE Center for International Economics.
    7. Yanochik Mark A. & Kumazawa Risa, 2009. "Interest Rate Manipulation, Environmental Damage, and Loss Valuation," Journal of Business Valuation and Economic Loss Analysis, De Gruyter, vol. 4(2), pages 1-14, April.

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