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Prevention and Insurance in Cities Exposed to Natural Disaster Risks

Author

Listed:
  • Arnaud Goussebaïle

Abstract

Prevention and insurance are studied in an urban model with spatial heterogeneity due not only to commuting transport costs but also to natural disaster risks. Costly insurance and charity donation both lead to low insurance purchase. While the former leads to high prevention, the latter leads to low prevention. In the presence of charity, implementing insurance or building resilience subsidies may lead to even less prevention through higher development of risky areas. In all events, a public insurance policy with actuarially fair rates accounting for resilience investment and with full coverage requirements, along with lump-sum transfers, leads to Pareto improvement.

Suggested Citation

  • Arnaud Goussebaïle, 2020. "Prevention and Insurance in Cities Exposed to Natural Disaster Risks," Annals of Economics and Statistics, GENES, issue 139, pages 61-86.
    • Handle: RePEc:adr:anecst:y:2020:i:139:p:61-86
    DOI: 10.15609/annaeconstat2009.139.0061
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    More about this item

    Keywords

    Natural Disaster; Urbanization; Resilience; Insurance; Charity;
    All these keywords.

    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R58 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Regional Development Planning and Policy
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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