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

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

Jump-diffusion過程下の確率制御を応用した 気候変動下の防災投資政策に関する試案 [A conceptual model of optimizing disaster adaptation policy based on stochastic control under jump-diffusion process]

Hazards of tectonic origin, such as earthquakes and volcanoes, and those of meteorological origin, such as typhoons and torrential rains, which are influenced by climate change, differ in terms of the frequency and probability of disaster occurrence and the spatial extent of damage to the socio-economy. This study develops an optimal investment planning concept for disaster risk management that differentiates between rare and large-scale disaster risks and regularly occurring small-scale disaster risks, as a stochastic control model under a jump-diffusion process. We further develop an algorithm to numerically calculate the optimal value function and investigate the relationship between disaster characteristics and the optimal policy through numerical simulations

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

Purpose The authors present a dynamic macroeconomic model for assessment of disaster risk reduction (DRR) policies under multiple hazards. The model can be used to analyze and compare various potential policies in terms of their economic consequences. The decomposition of these effects into multiple benefits helps policy makers and other stakeholders better understand the ex ante and ex-post advantages of DRR investments. The purpose of this paper is to address these issues. Design/methodology/approach A dynamic real business cycle model is at the core of this research. In the model multiple natural hazards modeled stochastically cause shocks to the economy. Economic outcomes, most importantly, output can be assessed before and after disasters and under various DRR policies. The decomposition of benefits aims to quantify the concept of triple dividends. Findings In case study applications in Tanzania and Zambia, the authors find that investments into physical infrastructure and risk transfer instruments generate a variety of benefits even in the absence of disaster. A land use restriction with planned relocation for example reduces output in the short run but in the long run increases it. Overall, policy effects of various DRR interventions evolve in a nonmonotonic manner and should be evaluated over a long period of time using dynamic simulation. Originality/value The novelty of this study lies in the economic quantification of multiple benefits described in the triple dividends literature. This helps comparing ex ante, ex-post and volatility-related economic effects of multiple disasters and related physical and financial DRR investment options. As observed in the case studies, the model can also identify overlooked temporal heterogeneity of co-benefits of DRR investments

Agent-based modelling of flood disaster impact for agricultural community: a case study in Pampamga river basin, republic of the Philippines

We developed an agent-based model of the farming and economic behavior of rice farmers under flood risk for the assessment of climate change impacts in flood-prone farming communities. The developed model was applied to Candaba City in Pampanga Province, Republic of the Philippines to analyze the impact of flood disasters on the farming activities of each farming household under a flood scenario. Simulation of a test flood scenario showed that the assets in the flood-prone areas were significantly reduced. In the case of large-scale floods that reduce yields in the entire region, the income loss of farm households was limited to a certain extent due to the high rice prices caused by excess demand in the rice market, while the long-term asset formation of poor farm households were seriously hampered in the case of a series of small- and medium-scale floods. In terms of economic inequality, the Gini coefficient is higher for medium floods when the proportion of affected households is limited to a certain level

Thermodynamic studies of interactions of calf spleen PNP with acyclic phosphonate inhibitors

The Gibbs binding energy and entropy/enthalpy contributions to the interaction of calf spleen purine nucleoside phosphorylase (PNP) with the novel multisubstrate analogue DFPP-DG, as well as with DFPP-G and (S)-PMP-DAP were determined by fluorescence and calorimetric studies. Results were compared with findings for guanine - a natural reaction product and inhibitor