Risks, ex-ante actions, and public assistance: Impacts of natural disasters on child schooling in Bangladesh, Ethiopia, and Malawi

"This paper uses panel data from Bangladesh, Ethiopia, and Malawi to examine the impacts of natural disasters on schooling investments, with a particular focus on the roles of ex-ante actions and ex-post responses. We find that the importance of ex-ante actions depends on disaster risks and the likelihood of public assistance, potentially creating substitution between the two actions. We find that higher future probabilities of disaster increase the likelihood of agents holding more human capital and/or livestock relative to land; this asset-portfolio effect is significant in disaster-prone areas. Our empirical results support the roles of both ex-ante and ex-post (public assistance) responses in coping with disasters, but we see interesting variations across countries. In Ethiopia, public assistance plays a more important role than ex-ante actions in mitigating the impact of shocks on child schooling. In contrast, Malawi households rely more on private ex-ante actions than on public assistance. The Bangladesh example shows that active roles are played by both ex-ante and ex-post actions. These observations are consistent with our findings on the relationship between ex-ante actions and disaster risks. Our results also show that among ex-ante actions, human capital accumulated in the household prior to disasters helps mitigate the negative effects of a disaster in both the short and long runs." from authors' abstractNatural disasters, Ex-ante actions, Ex-post responses, Human capital investment, Poverty reduction, Social protection, Gender, Childcare and work,

Responding to Threats of Climate Change Mega-Catastrophes

There is a low but uncertain probability that climate change could trigger “mega-catastrophes,” severe and at least partly irreversible adverse effects across broad regions. This paper first discusses the state of current knowledge and the defining characteristics of potential climate change mega-catastrophes. While some of these characteristics present difficulties for using standard rational choice methods to evaluate response options, there is still a need to balance the benefits and costs of different possible responses with appropriate attention to the uncertainties. To that end, we present a qualitative analysis of three options for mitigating the risk of climate mega-catastrophes—drastic abatement of greenhouse gas missions, development and implementation of geoengineering, and large-scale ex ante adaptation— against the criteria of efficacy, cost, robustness, and flexibility. We discuss the composition of a sound portfolio of initial investments in reducing the risk of climate change mega-catastrophes.climate change, catastrophe, risk, decisionmaking under uncertainty

Architecture of Environmental Risk Modelling: for a faster and more robust response to natural disasters

Demands on the disaster response capacity of the European Union are likely to increase, as the impacts of disasters continue to grow both in size and frequency. This has resulted in intensive research on issues concerning spatially-explicit information and modelling and their multiple sources of uncertainty. Geospatial support is one of the forms of assistance frequently required by emergency response centres along with hazard forecast and event management assessment. Robust modelling of natural hazards requires dynamic simulations under an array of multiple inputs from different sources. Uncertainty is associated with meteorological forecast and calibration of the model parameters. Software uncertainty also derives from the data transformation models (D-TM) needed for predicting hazard behaviour and its consequences. On the other hand, social contributions have recently been recognized as valuable in raw-data collection and mapping efforts traditionally dominated by professional organizations. Here an architecture overview is proposed for adaptive and robust modelling of natural hazards, following the Semantic Array Programming paradigm to also include the distributed array of social contributors called Citizen Sensor in a semantically-enhanced strategy for D-TM modelling. The modelling architecture proposes a multicriteria approach for assessing the array of potential impacts with qualitative rapid assessment methods based on a Partial Open Loop Feedback Control (POLFC) schema and complementing more traditional and accurate a-posteriori assessment. We discuss the computational aspect of environmental risk modelling using array-based parallel paradigms on High Performance Computing (HPC) platforms, in order for the implications of urgency to be introduced into the systems (Urgent-HPC).Comment: 12 pages, 1 figure, 1 text box, presented at the 3rd Conference of Computational Interdisciplinary Sciences (CCIS 2014), Asuncion, Paragua

Returns on Resilience: The Business Case

Real estate projects designed to withstand the effects of climate change can provide substantial returns on investment and an array of other benefits, according to this new report. Case studies from 10 leading resilience projects are highlighted, ranging from a Boston hospital built to withstand coastal storms to a residential community in San Antonio built to withstand the effects of intense heat and drought. Other communities with highlighted case studies include Queens, N.Y.; Miami, FL; Grand Cayman, Cayman Islands; Nashville, TN; Tucson, AZ and Lancaster, CA.The study found an array of benefits from the climate-smart designs in addition to their strength against climate unpredictability. They include:Better energy efficiency. For example, multilayered impact-resistant windows save energy and reduce utility bills.Greater marketing, sales and leasing success driven by buyers' desires for well-built structures that will withstand harsh conditions and keep their value longer.Better financing options and lower insurance rates based on the reduced risk from resilient and hardened structures

Reflections on U.S. Disaster Insurance Policy for the 21st Century

The devastation caused by hurricanes during the 2004 and 2005 seasons has been unprecedented and is forcing the insurance industry to reevaluate the role that it can play in dealing with future natural disasters in the United States. As shown in Table 1 the four hurricanes that hit Florida in the fall of 2004 -- Charley, Frances, Ivan and Jeanne---and Hurricanes Katrina and Rita in 2005 comprised half of the top 12 disasters with respect to insured losses between 1970 and 2005. On a related note, 18 of the 20 most costly disasters occurred between 1990 and 2005 and 10 occurred in the 21st Century. This context is totally different than the scale of economic loss the country has suffered from natural disasters and other extreme events in the 20th century. The first section of the paper addresses the first question by outlining two principles on which a disaster insurance program should be based. Section 3 then focuses on the second question by analyzing the insurability of a risk and examining the challenges facing the private sector in providing coverage against natural disasters. Section 4 turns to the third question and delineates the opportunities and challenges of a comprehensive disaster insurance program. Section 5 poses a set of open issues that are currently being addressed by a research project on disaster insurance undertaken by the Wharton Risk Center in conjunction with the Insurance Information Institute and Georgia State University. The concluding section summarizes the key issues associated with providing disaster insurance in the 21st century.

Reflections on U.S. Disaster Insurance Policy for the 21st Century

This paper proposes that we examine the feasibility of including earthquake and water damage as part of a global homeowners policy for dealing with the catastrophic risk problem from natural disasters. By undertaking such an analysis one is forced to address the question as to who should pay for disasters and how can we encourage individuals to undertake protective measures in advance of the event. Two key principles underlying any disaster insurance program is that the rates reflect the risk and that coverage is affordable. For lower income individuals it will be impossible to satisfy the first principle without some type of subsidy from the public sector. There are also a set of questions as to whether the private sector has the ability to cover losses from catastrophic disasters on their own or will need some type of public sector involvement. There are a set of related issues that have to be considered when developing any type of disaster insurance program. These include the ability to assess the risk and the uncertainty of the models, the appropriate role of regulation, balancing the concerns of the different stakeholders concerned with this issue and the types of subsidies and back-up provision that can be offered by the public sector. Finally we need a clear understanding of the political and social landscape as well as how choices are actually made so as to develop a disaster insurance program as part of a hazard management strategy that achieve its desired impacts. The challenges in this regard are quite different today than they were in the 20th century because of the magnitude of losses from these disasters in the past few years.Health and Safety

Responding to Threats of Climate Change Mega-Catastrophes

There is a low but uncertain probability that climate change could trigger "mega-catastrophes," severe and at least partly irreversible adverse effects across broad regions. This paper first discusses the state of current knowledge and the defining characteristics of potential climate change mega-catastrophes. While some of these characteristics present difficulties for using standard rational choice methods to evaluate response options, there is still a need to balance the benefits and costs of different possible responses with appropriate attention to the uncertainties. To that end, we present a qualitative analysis of three options for mitigating the risk of climate mega-catastrophes--drastic abatement of greenhouse gas emissions, development and implementation of geoengineering, and large-scale ex ante adaptation--against the criteria of efficacy, cost, robustness, and flexibility. We discuss the composition of a sound portfolio of initial investments in reducing the risk of climate change mega-catastrophes.

Earthquake Risk and Earthquake Catastrophe Insurance for the People's Republic of China

The year 2008 witnessed the renewed interests in earthquake risk management and insurance in the People's Republic of China (PRC), after the Wenchuan earthquake hit the country in May. Located along the southeastern edge of the Euro-Asian Plate, the PRC has a relatively high seismicity, which is manifested by the frequent occurrence of large and disastrous earthquakes. Buildings and infrastructure in the earthquake-prone regions of the PRC have relatively low earthquake resistance levels. Hence, disastrous earthquakes result not only in large numbers of injuries and fatalities but also in huge economic losses from property damages. While the PRC began testing earthquake insurance programs in the late 1980s, the overall penetration rate remains very low. The low penetration rate not only creates disruptions for the government after a major earthquake but also, in some cases, delays the reconstruction efforts. Moreover, as a result of the low penetration of earthquake insurance in the PRC, the government serves as the predominant bearer of financial risk from earthquake catastrophes. This paper discusses historical earthquakes and earthquake risk in the PRC and the recent developments of PRC's earthquake risk reduction efforts. The general principles of earthquake programs are explained and the critical issues of formulating earthquake programs in the PRC are discussed, including lessons from earthquake insurance in other countries and other catastrophe insurance in the PRC, data issues, loss risk modeling issues, financial risk modeling issues, legislative issues, and public awareness issues. The paper concludes with several policy directions that the Asian Development Bank can take to help the PRC in its design and implementation of earthquake insurance.earthquake insurance; China; earthquake risk; Wenchuan earthquake; catastrophe insurance