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Natural and Industrial Disasters : Land Use and Insurance

  • Grislain-Letrémy, Céline
  • Villeneuve, Bertrand

Urbanization in exposed areas increases the cost of disasters. For industrial risks, potential victims raise firms’ liabilities. For natural risks, overexposure by some undermines mutualization. Land use policy (particularly exclusion zones) and insurance shape urbanization, but their efficiency is limited by hazard-map precision. Map-based discrimination being politically sensitive, we identify an operation of map redrawing that increases the welfare of all. Climate change and population growth increase risk. We exhibit realistic cases where exclusion zones shrink as risk rises. We disentangle the competing effects at play. Results are established for alternative distributions of bargaining power between households, mayor and firm.

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Paper provided by Paris Dauphine University in its series Economics Papers from University Paris Dauphine with number 123456789/7845.

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Date of creation: 2011
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Publication status: Published in Cahiers de la Chaire Finance et Développement Durable, 2011
Handle: RePEc:dau:papers:123456789/7845
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