An Exploration of the Link between Development, Economic Growth, and Natural Risk
This paper investigates the link between development, economic growth, and the economic losses from natural disasters in a general analytical framework, with an application to hurricane flood risks in New Orleans. It concludes that where capital ac...
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
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World Bank, Washington, DC
2013
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| Online Access: | http://documents.worldbank.org/curated/en/2012/10/16792662/exploration-link-between-development-economic-growth-natural-risk http://hdl.handle.net/10986/12052 |
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okr-10986-120522021-04-23T14:02:59Z An Exploration of the Link between Development, Economic Growth, and Natural Risk Hallegatte, Stephane ACCOUNTING ALLOCATIVE EFFICIENCY BORROWING CAPITAL INVESTMENTS CAPITALS CASUALTIES CLIMATE CHANGE CLIMATE CONDITIONS COST FUNCTIONS COST OF CAPITAL DAMAGES DEATH TOLL DECISION MAKING DECISIONMAKING DEVELOPMENT ECONOMICS DEVELOPMENT NETWORK DEVELOPMENT POLICY DISASTER DISASTER INSURANCE DISASTER REDUCTION DISASTER RISK DISASTER RISK REDUCTION DISASTER RISKS DRIVERS EARLY WARNING EARLY WARNING SYSTEMS EARTHQUAKE EARTHQUAKES ECONOMIC COSTS ECONOMIC GEOGRAPHY ECONOMIC GROWTH ECONOMIC LOSS ECONOMIC RESEARCH ELASTICITY EMERGENCY SERVICES ENVIRONMENTAL ECONOMICS EVACUATION EXTERNALITY EXTREME EVENTS FATALITIES FLOOD FLOOD PROTECTIONS FLOODED FLOODING FLOODS FORECASTS FUNCTIONAL FORMS GDP GDP PER CAPITA GROWTH POLICIES GROWTH RATE HOUSING HURRICANE HURRICANES INCOME INCOME ELASTICITY INSURANCE INSURANCE COVERAGE INSURANCE PREMIUM INTEREST RATE INTERNATIONAL INSTRUMENTS INTERNATIONAL TRADE INVENTORIES INVESTIGATIONS LARGE CITIES LDCS MARGINAL COST MARGINAL COSTS MARGINAL PRODUCTIVITY MIGRATION MORAL HAZARD NATIONAL INCOME NATURAL DISASTER NATURAL DISASTER REDUCTION NATURAL DISASTERS NATURAL HAZARDS OPTIMIZATION PER CAPITA INCOME POLITICAL ECONOMY PRODUCTION COSTS PRODUCTION FUNCTION PRODUCTION FUNCTIONS PRODUCTIVITY PRODUCTIVITY GROWTH PUBLIC POLICIES PUBLIC POLICY RATES REINSURANCE RISK AVERSION RISK MANAGEMENT RISK SHARING RISK TAKING SAFETY SAVINGS SLUMS STORM STORMS TOTAL FACTOR PRODUCTIVITY TRANSACTION COSTS TRANSPORT TROPICAL CYCLONE TSUNAMIS UNEMPLOYMENT UTILITY FUNCTION WEALTH WIND SPEED This paper investigates the link between development, economic growth, and the economic losses from natural disasters in a general analytical framework, with an application to hurricane flood risks in New Orleans. It concludes that where capital accumulates through increased density of capital at risk in a given area, and the costs of protection therefore increase more slowly than capital at risk, (i) protection improves over time and the probability of disaster occurrence decreases; (ii) capital at risk -- and thus economic losses in case of disaster -- increases faster than economic growth; (iii) increased risk-taking reinforces economic growth. In this context, average annual losses from disasters grow with income, and they grow faster than income at low levels of development and slower than income at high levels of development. These findings are robust to a broad range of modeling choices and parameter values, and to the inclusion of risk aversion. They show that risk-taking is both a driver and a consequence of economic development, and that the world is very likely to experience fewer but more costly disasters in the future. It is therefore critical to increase economic resilience through the development of stronger recovery and reconstruction support instruments. 2013-01-02T21:20:39Z 2013-01-02T21:20:39Z 2012-10 http://documents.worldbank.org/curated/en/2012/10/16792662/exploration-link-between-development-economic-growth-natural-risk http://hdl.handle.net/10986/12052 English en_US Policy Research Working Paper; No. 6216 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
ACCOUNTING ALLOCATIVE EFFICIENCY BORROWING CAPITAL INVESTMENTS CAPITALS CASUALTIES CLIMATE CHANGE CLIMATE CONDITIONS COST FUNCTIONS COST OF CAPITAL DAMAGES DEATH TOLL DECISION MAKING DECISIONMAKING DEVELOPMENT ECONOMICS DEVELOPMENT NETWORK DEVELOPMENT POLICY DISASTER DISASTER INSURANCE DISASTER REDUCTION DISASTER RISK DISASTER RISK REDUCTION DISASTER RISKS DRIVERS EARLY WARNING EARLY WARNING SYSTEMS EARTHQUAKE EARTHQUAKES ECONOMIC COSTS ECONOMIC GEOGRAPHY ECONOMIC GROWTH ECONOMIC LOSS ECONOMIC RESEARCH ELASTICITY EMERGENCY SERVICES ENVIRONMENTAL ECONOMICS EVACUATION EXTERNALITY EXTREME EVENTS FATALITIES FLOOD FLOOD PROTECTIONS FLOODED FLOODING FLOODS FORECASTS FUNCTIONAL FORMS GDP GDP PER CAPITA GROWTH POLICIES GROWTH RATE HOUSING HURRICANE HURRICANES INCOME INCOME ELASTICITY INSURANCE INSURANCE COVERAGE INSURANCE PREMIUM INTEREST RATE INTERNATIONAL INSTRUMENTS INTERNATIONAL TRADE INVENTORIES INVESTIGATIONS LARGE CITIES LDCS MARGINAL COST MARGINAL COSTS MARGINAL PRODUCTIVITY MIGRATION MORAL HAZARD NATIONAL INCOME NATURAL DISASTER NATURAL DISASTER REDUCTION NATURAL DISASTERS NATURAL HAZARDS OPTIMIZATION PER CAPITA INCOME POLITICAL ECONOMY PRODUCTION COSTS PRODUCTION FUNCTION PRODUCTION FUNCTIONS PRODUCTIVITY PRODUCTIVITY GROWTH PUBLIC POLICIES PUBLIC POLICY RATES REINSURANCE RISK AVERSION RISK MANAGEMENT RISK SHARING RISK TAKING SAFETY SAVINGS SLUMS STORM STORMS TOTAL FACTOR PRODUCTIVITY TRANSACTION COSTS TRANSPORT TROPICAL CYCLONE TSUNAMIS UNEMPLOYMENT UTILITY FUNCTION WEALTH WIND SPEED |
| spellingShingle |
ACCOUNTING ALLOCATIVE EFFICIENCY BORROWING CAPITAL INVESTMENTS CAPITALS CASUALTIES CLIMATE CHANGE CLIMATE CONDITIONS COST FUNCTIONS COST OF CAPITAL DAMAGES DEATH TOLL DECISION MAKING DECISIONMAKING DEVELOPMENT ECONOMICS DEVELOPMENT NETWORK DEVELOPMENT POLICY DISASTER DISASTER INSURANCE DISASTER REDUCTION DISASTER RISK DISASTER RISK REDUCTION DISASTER RISKS DRIVERS EARLY WARNING EARLY WARNING SYSTEMS EARTHQUAKE EARTHQUAKES ECONOMIC COSTS ECONOMIC GEOGRAPHY ECONOMIC GROWTH ECONOMIC LOSS ECONOMIC RESEARCH ELASTICITY EMERGENCY SERVICES ENVIRONMENTAL ECONOMICS EVACUATION EXTERNALITY EXTREME EVENTS FATALITIES FLOOD FLOOD PROTECTIONS FLOODED FLOODING FLOODS FORECASTS FUNCTIONAL FORMS GDP GDP PER CAPITA GROWTH POLICIES GROWTH RATE HOUSING HURRICANE HURRICANES INCOME INCOME ELASTICITY INSURANCE INSURANCE COVERAGE INSURANCE PREMIUM INTEREST RATE INTERNATIONAL INSTRUMENTS INTERNATIONAL TRADE INVENTORIES INVESTIGATIONS LARGE CITIES LDCS MARGINAL COST MARGINAL COSTS MARGINAL PRODUCTIVITY MIGRATION MORAL HAZARD NATIONAL INCOME NATURAL DISASTER NATURAL DISASTER REDUCTION NATURAL DISASTERS NATURAL HAZARDS OPTIMIZATION PER CAPITA INCOME POLITICAL ECONOMY PRODUCTION COSTS PRODUCTION FUNCTION PRODUCTION FUNCTIONS PRODUCTIVITY PRODUCTIVITY GROWTH PUBLIC POLICIES PUBLIC POLICY RATES REINSURANCE RISK AVERSION RISK MANAGEMENT RISK SHARING RISK TAKING SAFETY SAVINGS SLUMS STORM STORMS TOTAL FACTOR PRODUCTIVITY TRANSACTION COSTS TRANSPORT TROPICAL CYCLONE TSUNAMIS UNEMPLOYMENT UTILITY FUNCTION WEALTH WIND SPEED Hallegatte, Stephane An Exploration of the Link between Development, Economic Growth, and Natural Risk |
| relation |
Policy Research Working Paper; No. 6216 |
| description |
This paper investigates the link between
development, economic growth, and the economic losses from
natural disasters in a general analytical framework, with an
application to hurricane flood risks in New Orleans. It
concludes that where capital accumulates through increased
density of capital at risk in a given area, and the costs of
protection therefore increase more slowly than capital at
risk, (i) protection improves over time and the probability
of disaster occurrence decreases; (ii) capital at risk --
and thus economic losses in case of disaster -- increases
faster than economic growth; (iii) increased risk-taking
reinforces economic growth. In this context, average annual
losses from disasters grow with income, and they grow faster
than income at low levels of development and slower than
income at high levels of development. These findings are
robust to a broad range of modeling choices and parameter
values, and to the inclusion of risk aversion. They show
that risk-taking is both a driver and a consequence of
economic development, and that the world is very likely to
experience fewer but more costly disasters in the future. It
is therefore critical to increase economic resilience
through the development of stronger recovery and
reconstruction support instruments. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Hallegatte, Stephane |
| author_facet |
Hallegatte, Stephane |
| author_sort |
Hallegatte, Stephane |
| title |
An Exploration of the Link between Development, Economic Growth,
and Natural Risk |
| title_short |
An Exploration of the Link between Development, Economic Growth,
and Natural Risk |
| title_full |
An Exploration of the Link between Development, Economic Growth,
and Natural Risk |
| title_fullStr |
An Exploration of the Link between Development, Economic Growth,
and Natural Risk |
| title_full_unstemmed |
An Exploration of the Link between Development, Economic Growth,
and Natural Risk |
| title_sort |
exploration of the link between development, economic growth,
and natural risk |
| publisher |
World Bank, Washington, DC |
| publishDate |
2013 |
| url |
http://documents.worldbank.org/curated/en/2012/10/16792662/exploration-link-between-development-economic-growth-natural-risk http://hdl.handle.net/10986/12052 |
| _version_ |
1764418871807180800 |