Planning for natural disasters in a stochastic world

Lester Lave () and Jay Apt ()

Journal of Risk and Uncertainty, 2006, vol. 33, issue 1, pages 117-130

Abstract: We examine the risks and management of natural disasters. A benefit-cost framework focuses attention on (1) designing control structures, such as dams and levees, and mitigation policies, such as construction standards, to protect lives and property against small and medium, rather than large sized natural disasters; and (2) warning and evacuation to save lives for large natural disasters. Providing information rather than command solutions generally enhances social benefits, if people understand the risks and bear the expected costs. Requiring actuarially fair insurance simultaneously provides information and has individuals bear the expected costs. Copyright Springer Science + Business Media, LLC 2006

Keywords: Natural disasters; Externalities; Equity; Decision making under risk and uncertainty; Climate; Benefit-cost analysis (search for similar items in EconPapers)

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