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Aid, natural disasters and the samaritan's dilemma

Author

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  • Raschky, Paul A.
  • Schwindt, Manijeh

Abstract

This paper discusses the impact of foreign aid on the recipient country's preparedness against natural disasters. The theoretical model shows that foreign aid can have two opposing effects on a country's level of mitigating activities. In order to test the theoretical propositions, the authors analyze the effect of foreign aid dependence on ex-ante risk-management activity proxied by the death toll from major storms, floods and earthquakes occurring worldwide between 1980 and 2002. They find evidence that the crowding-out effect of foreign aid outweighs the preventive effect in the case of storms, while there is mixed evidence in the case of floods and earthquakes.

Suggested Citation

  • Raschky, Paul A. & Schwindt, Manijeh, 2009. "Aid, natural disasters and the samaritan's dilemma," Policy Research Working Paper Series 4952, The World Bank.
    • Handle: RePEc:wbk:wbrwps:4952
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    Cited by:

    1. Robert Hartwig & Greg Niehaus & Joseph Qiu, 2020. "Insurance for economic losses caused by pandemics," The Geneva Risk and Insurance Review, Palgrave Macmillan;International Association for the Study of Insurance Economics (The Geneva Association), vol. 45(2), pages 134-170, September.
    2. Dreher, Axel & Fuchs, Andreas & Langlotz, Sarah, 2019. "The effects of foreign aid on refugee flows," European Economic Review, Elsevier, vol. 112(C), pages 127-147.
    3. Timo Goeschl & Shunsuke Managi, 2019. "Public in-Kind Relief and Private Self-Insurance," Economics of Disasters and Climate Change, Springer, vol. 3(1), pages 3-21, April.
    4. Fluhrer, Svenja, 2023. "Crowding-in or crowding-out: The effect of humanitarian aid on households’ investments in climate adaptation," MPRA Paper 117975, University Library of Munich, Germany.
    5. Lazzaroni, Sara & van Bergeijk, Peter A.G., 2014. "Natural disasters' impact, factors of resilience and development: A meta-analysis of the macroeconomic literature," Ecological Economics, Elsevier, vol. 107(C), pages 333-346.
    6. Bulte, Erwin & Xu, Lihe & Zhang, Xiaobo, 2018. "Post-disaster aid and development of the manufacturing sector: Lessons from a natural experiment in China," European Economic Review, Elsevier, vol. 101(C), pages 441-458.
    7. Kucuk, Merve & Ulubasoglu, Mehmet, 2024. "Paying income tax after a natural disaster," Journal of Environmental Economics and Management, Elsevier, vol. 128(C).
    8. Kousky, Carolyn & Michel-Kerjan, Erwann O. & Raschky, Paul A., 2018. "Does federal disaster assistance crowd out flood insurance?," Journal of Environmental Economics and Management, Elsevier, vol. 87(C), pages 150-164.
    9. Peter A. G. van Bergeijk & Sara Lazzaroni, 2015. "Macroeconomics of Natural Disasters: Strengths and Weaknesses of Meta‐Analysis Versus Review of Literature," Risk Analysis, John Wiley & Sons, vol. 35(6), pages 1050-1072, June.
    10. Jorge Gallego, 2015. "Natural Disasters and Clientelism: the Case of Floods and Landslides in Colombia," Documentos de Trabajo 12537, Universidad del Rosario.
    11. Erwann Michel-Kerjan, 2013. "Finance des risques catastrophiques. Le marché américain est en plein bouleversement," Revue économique, Presses de Sciences-Po, vol. 64(4), pages 615-634.
    12. Mensah, Edouard R. & Filipski, Mateusz J., 2022. "Saving for a rainy day: the impact of natural disasters on savings rates," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322266, Agricultural and Applied Economics Association.
    13. Akbulut-Yuksel, Mevlude & Rahman, Muhammad Habibur & Ulubaşoğlu, Mehmet Ali, 2023. "Silver lining of the water: The role of government relief assistance in disaster recovery," European Journal of Political Economy, Elsevier, vol. 79(C).
    14. Marto, Ricardo & Papageorgiou, Chris & Klyuev, Vladimir, 2018. "Building resilience to natural disasters: An application to small developing states," Journal of Development Economics, Elsevier, vol. 135(C), pages 574-586.
    15. Li, C. & van Bergeijk, P.A.G., 2016. "Do natural disasters stimulate international trade?," ISS Working Papers - General Series 622, International Institute of Social Studies of Erasmus University Rotterdam (ISS), The Hague.
    16. Oscar Becerra & Eduardo Cavallo & Ilan Noy, 2014. "Foreign Aid in the Aftermath of Large Natural Disasters," Review of Development Economics, Wiley Blackwell, vol. 18(3), pages 445-460, August.
    17. Tatyana Deryugina & Barrett Kirwan, 2018. "Does The Samaritan'S Dilemma Matter? Evidence From U.S. Agriculture," Economic Inquiry, Western Economic Association International, vol. 56(2), pages 983-1006, April.

    More about this item

    Keywords

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    JEL classification:

    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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