A multi-sector multi-region economic growth model of drought and the value of water: A case study in Pakistan

This study integrates ecohydrological vegetation and multi-sector multi-region economic growth models to evaluate the impacts of drought on markets and value the economic value of water. The values of several parameters of the agricultural production function are identified by applying leaf area indices that are simulated by the ecohydrological model, AgriCLVDAS. The three-sector three-region closed-economy model with the agricultural production functions of both irrigable and rainfed farmland as well as the stochastic process of precipitation and availability of river water are formulated to analyze the water rent as well as GDP growth in Pakistan under drought stress. According to the characteristics of the closed-economy model, the crop price is increased during drought periods because of the price hike in water (i.e., an increase in the marginal productivity of water, which is double that in high-water periods in Pakistan). The study further presents a way of investigating water resource management policies by applying comparative dynamics

Potential of a shopping street to serve as a food distribution center and an evacuation shelter during disasters: Case study of Kobe, Japan

This study demonstrates the potential use of a shopping street with disaster-proof buildings as a temporary evacuation shelter for local residents at the time of a disaster. We propose a simple estimation method to calculate the number of people for which the retail shops and restaurants in the shopping street can potentially provide food and drink using their inventory. We also estimate the number of evacuees that can be accommodated in the vacant spaces of the buildings. Our proposed method is applied to a shopping street in Kobe, Japan. While 5,200 people in the local community are expected to evacuate at the time of an earthquake, our survey shows that, in the case of power, gas, and water outages, the total amount of available food and drink supplied by the local shops and restaurants would be approximately 1,200 and 1,700 person-days, respectively. In another case, in which alternative facilities provide electricity, gas, and water, the amount of available food increases to about 2,800 person-days. Moreover, the building can provide space for overnight stay for approximately 2,300 people. The results also suggest that, by building stockpiles of food and drink in the unoccupied spaces of the building, the capacity of accommodating the local evacuees will be further enhanced. Future directions for more accurate and widely applicable estimation methods are also discussed

Developing a Growth Model of Household Heterogeneity, Human Capital Investment, and Impacts of Disaster Events

This study develops a simple monetary growth model of the sluggish factor-price adjustment to examine GDP growth and distributional implications of climate-related disasters with a special focus on human capital investment in developing countries. The model demonstrates an endogenous business cycle through integration of nonlinear factors associated with the money-demand function and the human capital investment function. The results of the numerical analysis suggest that there is the possibility that a disaster occurring in an economy experiencing unemployment increases GDP in the short run but hampers growth in the long run. This is due to the interruption of human-capital investment, implying that the widespread view that a disaster causes short-run adverse GDP impacts may not always hold true and negative indirect impacts may manifest in the long-term. On such a path, development in disaster mitigation infrastructure could reduce human-capital gaps in the long run by supporting continued post-disaster human-capital investment opportunities for the poor. The study further points out the methodological potential of the nonlinear dynamic model for analyzing indirect risks. The nonlinear feature of our model derives long-term non-monotonic impacts on economic dynamics that are sensitive to small changes in initial values and direct disaster damages. This allows for the estimation of various qualitative and quantitative market responses associated with a macroeconomic situation such as a boom and recession, and the possibilities of lagged influences

Climate-related Disaster and Human Capital Investment in the Global South — Household Heterogeneity and Growth

This study develops a dynamic model of climate-related disaster impacts, considering multidimensional household heterogeneity, for analyzing changes in growth and inequality in low-income countries. Focusing on human capital development, the study demonstrates the multiple impacts of disaster risk reduction (DRR) policies on human capital investment, including the effect of schooling opportunities for households constrained by the subsistence consumption constraint. Through numerical simulations performed for two economies that differ in terms of human capital, modeled after Madagascar and Fiji, it is illustrated that the possibilities of involuntary unemployment and the work-learning choice drive the diversity in macroeconomic impacts of a disaster. In an economy characterized by low levels of human capital, a disaster could cause an increase in labor supply in the immediate aftermath, but interrupt human capital formation, impeding long-term growth and human capital formation. Such a result contradicts prevailing intuition by demonstrating that a disaster occurring in an economy under recession may not result in a large adverse GDP impact in the short run but may negatively impact growth in the long run. On such a path, a policy of development in DRR infrastructure with appropriate taxation could reduce human-capital gaps in the long run by supporting continued post-disaster human-capital-investment opportunities for the poor

Macroeconomic co-benefits of DRR investment: Assessment using the Dynamic Model of Multi-hazard Mitigation CoBenefits (DYNAMMICs) model

This contributing paper aims to bridge the important knowledge gap between the conceptualization of disaster risk reduction (DRR) benefits and its formal theoretical underpinnings and methods for quantifying benefits. This study also introduces a new macroeconomic framework for quantifying the multiple benefits of DRR investment. One of the most widely adopted framings, ‘Triple Dividends’ (Tanner et al. 2015), presents a series of narratives in which DRR investment not only protects but also fosters growth and other societal welfare but it falls short in how to quantify such multiple benefits. Given that the interaction of disaster risk with DRR investment and the macroeconomy is complex, the lack of detailed understanding regarding such dynamics limits the ability to effectively design a set of DRR investment options that yield synergies between DRR and other development aspirations. The Dynamic Model of Multi-hazard Mitigation CoBenefits (DYNAMMICs) framework serves to model the macro-economic benefits of DRR investments in this study. This study finds that, unlike the narrative-based approach used in the previous studies, the DYNAMMICs framework has demonstrated the complexity associated with the triple dividends concept. Different DRR investment options yielded a wide ranging trajectories of the 1st, 2nd and 3rd dividends, suggesting that a more careful analysis is needed to capture the full potential of DRR investment to foster the triple dividends. However, the DYNAMMICs framework proposed in this study is capable of evaluating multiple hazards and investment options at the same time and offers a way to evaluate the potential of DRR investment to create synergies with other development goals

Knowledge sharing, heterophily, and social network dynamics

This study formulates a model where (i) players are characterized by a knowledge set that changes endogenously by communication and (ii) some players have homophily preferences, while others have heterophily preferences. The study thus demonstrates that heterophilous players bridge different components and extend networks in an early stage and, subsequently, homophilous players take the role of a network hub that maintains network ties. It also illustrates the long-run knowledge distribution. Further, the model is embedded with new structural components that illustrate the strength of weak ties and the small-world phenomenon