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Regulating land development in a natural disaster-prone area: The roles of building codes

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  • Wang, Chunhua

Abstract

Implementing mandatory building codes is a major approach to preparing for natural disasters. Using a simple hybrid model which considers expected utility and spatial equilibrium, this paper analyzes the roles as self-insurance and self-protection played by building codes for regulating land development in a disaster-prone area. Positive externalities of self-insurance and self-protection justify the implementation of mandatory building codes. The net benefits of building codes are capitalized into land rents which, in turn, require responses in the design of optimal codes. Through impacting land market, community-wide socioeconomic characteristics of the area such as population, wage, and land area share of the risky region are found to have effects on the optimal levels of expenditure on self-insurance and self-protection. It is shown that consumer preferences and production functions for self-insurance and self-protection determine the signs of such effects which are reinforced or offset by competition for locations in the land market. Effects from changes in productivity levels and risk structure are also described.

Suggested Citation

  • Wang, Chunhua, 2014. "Regulating land development in a natural disaster-prone area: The roles of building codes," Resource and Energy Economics, Elsevier, vol. 36(1), pages 209-228.
    • Handle: RePEc:eee:resene:v:36:y:2014:i:1:p:209-228
    DOI: 10.1016/j.reseneeco.2012.10.002
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    References listed on IDEAS

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    More about this item

    Keywords

    Natural disaster; Building codes; Self-insurance; Self-protection; Spatial equilibrium;
    All these keywords.

    JEL classification:

    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R52 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Land Use and Other Regulations
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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