Quantitative Analysis of Optimal Investment Scale and Timing for Flood Control Measures by Multi-Regional Economic Growth Model: Case Studies in Viet Nam

Hiroaki Ishiwata, Masashi Sakamoto, Makoto Ikeda and Venkatachalam Anbumozhi
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Hiroaki Ishiwata: Pacific Consultants Co., Ltd., Tokyo, Japan
Masashi Sakamoto: Tohoku University
Makoto Ikeda: Kobe University

No DP-2023-24, Working Papers from Economic Research Institute for ASEAN and East Asia (ERIA)

Abstract: This study aims to develop and utilise a multi-regional economic growth model that can take into account flood damage and investment in disaster risk reduction, and, through case studies in Viet Nam, quantitatively analyse the long-term effects of investment in disaster risk reduction on the national and local economy, as well as the optimal scale and timing of investments in flood protection, to gain a better overview of these factors. The results indicate that additional investment in disaster risk reduction could stimulate economic growth, and that the optimal range of the disaster risk reduction budget rate was around 0.3% to 0.5% of GDP, assuming a constant budget rate throughout the total 25-year calculation period. In the case of a variable disaster risk reduction budget rate, we observed that a variable budget rate that gradually reduces the disaster risk reduction budget rate from a higher level than the current rate could further promote economic growth than if the budget rate were fixed. In both cases, we verified that with excessive investment in disaster risk reduction, the high tax burden had the risk of reducing investment in production capital and lead to stagnating economic growth. By region, the long-term effects of investment in disaster risk reduction were most seen in the Central region, where the rate of flood damage is the highest.

Keywords: disaster risk reduction investment; extensive flood risk; multi-regional economic growth model; Viet Nam (search for similar items in EconPapers)
JEL-codes: C68 E17 H21 H54 O11 O41 O53 R12 (search for similar items in EconPapers)
Date: 2024-02-02
New Economics Papers: this item is included in nep-env, nep-gro, nep-mac, nep-sea and nep-tra
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