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The impact of natural and manmade disasters on household welfare

  • Yasuyuki Sawada

In this article, we provide selective evidence on the impact of natural and manmade disasters on household welfare. First, we consider "ex ante" risk management and "ex post" risk-coping behaviors separately, showing evidence from the Asian economic crisis, earthquakes, and tsunami disasters. Second, we differentiate idiosyncratic risks from nondiversifiable aggregate risks that characterize a disaster. We also discuss the difficulties of designing index-type insurance against natural disasters, which are often rare, unforeseen events. Then, we investigate the role of self-insurance against large-scale disasters under which formal or informal mutual insurance mechanisms are largely ineffective. Credit accessibility is identified as one of the key factors facilitating risk-coping strategies. Copyright 2007 International Association of Agricultural Economists.

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Article provided by International Association of Agricultural Economists in its journal Agricultural Economics.

Volume (Year): 37 (2007)
Issue (Month): s1 (December)
Pages: 59-73

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Handle: RePEc:bla:agecon:v:37:y:2007:i:s1:p:59-73
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