Estimating the effects of risk transfer mechanisms against floods in Europe and U.S.A.: A dynamic panel approach
An analysis of the effects of natural hazards on society does not solely depend on a region's topographic or climatic exposure to natural processes, but the region's institutional resilience to natural processes that ultimately determines whether natural processes result in a natural hazard or not. An appropriate method for an international institutional comparison in the field of natural hazard management is still missing. The focus in this paper is on the institutional comparison of societal risk transfer mechanisms mitigating the effects disasters. Dynamic panel estimates using growth data from a) 199 European regions (NUTSII) between 1990-2004 and b) 3.050 U.S. counties between 1970-2003 reveal a significant negative impact of historical flood events on regional economic development. The application of GIS-data on the spatial distribution of flood events further allows to control for a regions exposure to floods. In the short run, a major flood event in a European region reduces the regional GDP by 0.4%-0.6%; an average flood event in the U.S.A reduces the personal income by 0.3%-0.4%. Mandatory insurance regimes in Europe absorb the negative short-run effect of a flood, while the National Flood Insurance Program (NFIP) in the U.S.A. mitigate the effects of a flood by about 50%. The results provide empirical foundation for the proposition that ex ante risk transfer policies are more efficient than ex post disaster relief.
|Date of creation:||Mar 2007|
|Date of revision:|
|Contact details of provider:|| Postal: Universitätsstraße 15, A - 6020 Innsbruck|
Web page: http://www.uibk.ac.at/fakultaeten/volkswirtschaft_und_statistik/index.html.en
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Reimund Schwarze & Gert G. Wagner, 2004.
"In the Aftermath of Dresden: New Directions in German Flood Insurance,"
The Geneva Papers on Risk and Insurance,
The International Association for the Study of Insurance Economics, vol. 29(2), pages 154-168, 04.
- Reimund Schwarze & Gert G Wagner, 2004. "In the Aftermath of Dresden: New Directions in German Flood Insurance," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan, vol. 29(2), pages 154-168, April.
- Nazrul Islam, 1995. "Growth Empirics: A Panel Data Approach," The Quarterly Journal of Economics, Oxford University Press, vol. 110(4), pages 1127-1170.
- Martin Gassebner & Alexander Keck & Robert Teh, 2006.
"Shaken, not stirred: the impact of disasters on international trade,"
KOF Working papers
06-139, KOF Swiss Economic Institute, ETH Zurich.
- Martin Gassebner & Alexander Keck & Robert Teh, 2010. "Shaken, Not Stirred: The Impact of Disasters on International Trade," Review of International Economics, Wiley Blackwell, vol. 18(2), pages 351-368, 05.
- Matthew E. Kahn, 2005. "The Death Toll from Natural Disasters: The Role of Income, Geography, and Institutions," The Review of Economics and Statistics, MIT Press, vol. 87(2), pages 271-284, May.
- Badinger, Harald & Müller, Werner G. & Tondl, Gabriele, 2002.
"Regional convergence in the European Union (1985 - 1999) : a spatial dynamic panel analysis,"
HWWA Discussion Papers
210, Hamburg Institute of International Economics (HWWA).
- Harald Badinger & Werner Muller & Gabriele Tondl, 2004. "Regional Convergence in the European Union, 1985- 1999: A Spatial Dynamic Panel Analysis," Regional Studies, Taylor & Francis Journals, vol. 38(3), pages 241-253.
- Gabriele Tondl & Harald Badinger & Werner Müller, 2003. "Regional convergence in the European Union (1985-1999). A spatial dynamic panel analysis," ERSA conference papers ersa03p455, European Regional Science Association.
- Thomas A. Garrett & Russell S. Sobel, 2002.
"The political economy of FEMA disaster payments,"
2002-012, Federal Reserve Bank of St. Louis.
- Tavares, Jose, 2004. "The open society assesses its enemies: shocks, disasters and terrorist attacks," Journal of Monetary Economics, Elsevier, vol. 51(5), pages 1039-1070, July.
- Gassebner, Martin & Keck, Alexander & Teh, Robert, 2006. "The impact of disasters on international trade," WTO Staff Working Papers ERSD-2006-04, World Trade Organization (WTO), Economic Research and Statistics Division.
- N. Gregory Mankiw & David Romer & David N. Weil, 1992.
"A Contribution to the Empirics of Economic Growth,"
The Quarterly Journal of Economics,
Oxford University Press, vol. 107(2), pages 407-437.
- R Blundell & Steven Bond, .
"Initial conditions and moment restrictions in dynamic panel data model,"
W14&104., Economics Group, Nuffield College, University of Oxford.
- Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
- Richard Blundell & Steve Bond, 1995. "Initial conditions and moment restrictions in dynamic panel data models," IFS Working Papers W95/17, Institute for Fiscal Studies.
- Blundell, R. & Bond, S., 1995. "Initial Conditions and Moment Restrictions in Dynamic Panel Data Models," Economics Papers 104, Economics Group, Nuffield College, University of Oxford.
- Halliday, Timothy, 2006.
"Migration, Risk, and Liquidity Constraints in El Salvador,"
Economic Development and Cultural Change,
University of Chicago Press, vol. 54(4), pages 893-925, July.
- Timothy Halliday, 2005. "Migration, Risk and Liquidity Constraints in El Salvador," Working Papers 200511, University of Hawaii at Manoa, Department of Economics, revised 28 Mar 2006.
- Timothy Besley & Robin Burgess, 2002. "The Political Economy of Government Responsiveness: Theory and Evidence from India," The Quarterly Journal of Economics, Oxford University Press, vol. 117(4), pages 1415-1451.
- Tobias N. Rasmussen, 2004. "Macroeconomic Implications of Natural Disasters in the Caribbean," IMF Working Papers 04/224, International Monetary Fund.
- Arellano, Manuel & Bover, Olympia, 1995.
"Another look at the instrumental variable estimation of error-components models,"
Journal of Econometrics,
Elsevier, vol. 68(1), pages 29-51, July.
- M Arellano & O Bover, 1990. "Another Look at the Instrumental Variable Estimation of Error-Components Models," CEP Discussion Papers dp0007, Centre for Economic Performance, LSE.
- Howard Kunreuther & Mark Pauly, 2006. "Rules rather than discretion: Lessons from Hurricane Katrina," Journal of Risk and Uncertainty, Springer, vol. 33(1), pages 101-116, September.
- Judson, Ruth A. & Owen, Ann L., 1999. "Estimating dynamic panel data models: a guide for macroeconomists," Economics Letters, Elsevier, vol. 65(1), pages 9-15, October.
- Howard Kunreuther & Mark Pauly, 2006. "Rules Rather Than Discretion: Lessons from Hurricane Katrina," NBER Working Papers 12503, National Bureau of Economic Research, Inc.
- Anbarci, Nejat & Escaleras, Monica & Register, Charles A., 2005. "Earthquake fatalities: the interaction of nature and political economy," Journal of Public Economics, Elsevier, vol. 89(9-10), pages 1907-1933, September.
- Albala-Bertrand, J. M., 1993. "Natural disaster situations and growth: A macroeconomic model for sudden disaster impacts," World Development, Elsevier, vol. 21(9), pages 1417-1434, September.
- Adam Rose & Shu-Yi Liao, 2005. "Modeling Regional Economic Resilience to Disasters: A Computable General Equilibrium Analysis of Water Service Disruptions," Journal of Regional Science, Wiley Blackwell, vol. 45(1), pages 75-112.
- von Ungern-Sternberg, Thomas, 2004. "Efficient Monopolies: The Limits of Competition in the European Property Insurance Market," OUP Catalogue, Oxford University Press, number 9780199268818, July.
When requesting a correction, please mention this item's handle: RePEc:inn:wpaper:2007-05. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Janette Walde)
If references are entirely missing, you can add them using this form.