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The Impact of Natural and Manmade Disasters on Household Welfare

  • Sawada, Yasuyuki

In this paper, 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 which can be diversified away through mutual insurance from non-diversifiable aggregate risks which 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. We also discuss public policy issues of emergency aid after disasters.

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File URL: http://purl.umn.edu/25750
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Paper provided by International Association of Agricultural Economists in its series 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia with number 25750.

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Date of creation: 2006
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Handle: RePEc:ags:iaae06:25750
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