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- Permanent Link:
- http://dpanther.fiu.edu/dpService/dpPurlService/purl/FI13051501/00001
Material Information
- Title:
- The costs and benefits of reducing risk from natural hazards to residential structures in developing countries.
- Series Title:
- Working Paper
- Creator:
- Hochrainer-Stigler, Stefan
Kunreuther, Howard
Linnerooth-Bayer, Joanne
Mechler, Reinhard
Michel-Kerjan, Erwann
Muir-Wood, Robert
Ranger, Nicola
Vaziri, Pantea
Young, Michael
Disaster Risk Reduction Program, Florida International University (DRR/FIU) ( summary contributor )
- Publisher:
- The Wharton School, University of Pennsylvania
- Publication Date:
- 2011
- Copyright Date:
- 2011
Notes
- Summary:
- This document is a cost-benefit analysis of retrofitting residential structures in highly exposed developing countries so that they are less vulnerable to natural hazards. The authors provide a systematic probabilistic approach for evaluating alternative risk reducing measures. According to a U.S. Federal Emergency Management Agency (FEMA) study of 4,000 DRR programs, such measures lead to an average cost-benefit ratio of four. Despite this evidence, little has been invested in reducing risks in highly hazardous locations. This may be the result of short time horizons, where initial costs of investing in DRR are viewed as exorbitant in relation to perceived benefits, which accrue over time. Lack of information on net economic and social benefits of DRR tends to lead to greater emphasis on disaster response. Currently, donors allocate 98% of disaster management funds towards relief and reconstruction. In 2005, the UN World Conference on Disaster Reduction and the Hyogo Framework for Action sought to profile DRR. This document examines structures exposed to three types of hazards in four countries: hurricane risk in St. Lucia, earthquake risk in Istanbul, and flood risk in Jakarta, Indonesia and Uttar Pradesh, India. For each, the authors examine specific DRR measures that can be undertaken for a representative house; then determine under what conditions the discounted expected benefits, with respect to reducing losses, exceed the cost of the measure. The three variables that play a role in whether a household invests in DRR are: if the cost-benefit ratio is high enough; if there are sufficient funds to undertake this investment; and whether the household does not anticipate substantial ‘free’ post-disaster assistance. Though some of the DRR measures were not cost effective under conservative assumptions, when other variables such as mortality and morbidity risk, climate change, risk aversion, multiple hazards, and indirect losses are incorporated, the cost-benefit calculus changes towards supporting implementation. The authors believe that government can play a significant role in encouraging individual households to enact DRR measures by establishing and enforcing stricter building codes, offering assistance to households that agree to partake in DRR measures, and encouraging insurance against potential disasters which can lead to measures to reduce risk to lower insurance premiums. ( English )
- Subject:
- Cost Benefit Analysis ( English )
- Citation/Reference:
- Hochrainer-Stigler, S., Kunreuther, H., Linnerooth-Bayer, J., Mechler, R., Michel-Kerjan, E., Muir-Wood, R., Ranger, N., Vaziri, P., and Young, M. (2010). The costs and benefits of reducing risk from natural hazards to residential structures in developing countries. The Wharton School’s Risk Management and Decision Processes Center, University of Pennsylvania.
Record Information
- Source Institution:
- Florida International University
- Rights Management:
- Refer to main document/publisher for use rights.
- Resource Identifier:
- FI13051501
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