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The impact of preemptive investment on natural disasters

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  • Jhorland Ayala‐García
  • Sandy Dall'Erba

Abstract

This paper studies the impact of preemptive investment against natural disasters on the future occurrence of landslides and the losses associated with it. Based on a panel of 746 Colombian municipalities with medium and high risk of landslides and an instrumental variable approach, we find that preemptive public investment can reduce the number of landslides, the number of people who die, are injured, or missing after a landslide, as well as the number of people affected. However, we do not find it has any effect on the number of houses destroyed. The results reveal that local governments focus their preventive measures on saving the lives and the physical integrity of their citizens, but they pay less attention to the direct market losses of natural disasters. These results are relevant in the presence of imperfect private insurance markets and increased informal settlements. Este artículo estudia el impacto de la inversión preventiva contra los desastres vinculados a amenazas naturales en la futura aparición de deslizamientos de tierra y las pérdidas asociadas a ellos. Partiendo de un panel de 746 municipios colombianos con riesgo medio y alto de deslizamientos de tierra y un enfoque de variables instrumentales, se encontró que la inversión pública preventiva puede reducir el número de deslizamientos de tierra, el número de personas que mueren, resultan heridas o desaparecen después de un deslizamiento, así como el número de personas afectadas. Sin embargo, no se encontró que tenga ningún efecto sobre el número de casas destruidas. Los resultados revelan que los gobiernos locales centran sus medidas preventivas en salvar las vidas y la integridad física de sus ciudadanos, pero prestan menos atención a las pérdidas de mercado directas de los desastres ligados a amenazas naturales. Estos resultados son relevantes en casos de mercados imperfectos de seguros privados y de un aumento de los asentamientos informales. 本稿では、地滑り発生とそれに伴う損失に対する自然災害への予防的投資の影響を検討する。地滑りのリスクが中程度および高度の、コロンビアの746の自治体からなるパネルと手段的変数アプローチから、予防的公共投資が、地滑りの件数、地滑り後により死亡者、負傷者または行方不明となる人の数、および影響を受ける人の数を減らすことができることが示された。しかし、破壊された家屋の数には予防的投資の影響は見られなかった。結果から、地方自治体は、市民の生命と身体の保全に重点を置いて予防対策を行っているが、自然災害による直接的な市場損失にはあまり注意を払っていないことが明らかになった。この結果は、不完全な民間保険市場の存在やインフォーマルな居住地の増加に関連するものである。

Suggested Citation

  • Jhorland Ayala‐García & Sandy Dall'Erba, 2022. "The impact of preemptive investment on natural disasters," Papers in Regional Science, Wiley Blackwell, vol. 101(5), pages 1087-1103, October.
  • Handle: RePEc:bla:presci:v:101:y:2022:i:5:p:1087-1103
    DOI: 10.1111/pirs.12700
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    JEL classification:

    • H1 - Public Economics - - Structure and Scope of Government
    • H4 - Public Economics - - Publicly Provided Goods
    • H5 - Public Economics - - National Government Expenditures and Related Policies
    • C26 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Instrumental Variables (IV) Estimation
    • D6 - Microeconomics - - Welfare Economics

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