Regulating land development in a natural disaster-prone area: The roles of building codes

Chunhua Wang ()

Resource and Energy Economics, 2014, vol. 36, issue 1, 209-228

Abstract: Implementing mandatory building codes is a major approach to preparing for natural disasters. Using a simple hybrid model which considers expected utility and spatial equilibrium, this paper analyzes the roles as self-insurance and self-protection played by building codes for regulating land development in a disaster-prone area. Positive externalities of self-insurance and self-protection justify the implementation of mandatory building codes. The net benefits of building codes are capitalized into land rents which, in turn, require responses in the design of optimal codes. Through impacting land market, community-wide socioeconomic characteristics of the area such as population, wage, and land area share of the risky region are found to have effects on the optimal levels of expenditure on self-insurance and self-protection. It is shown that consumer preferences and production functions for self-insurance and self-protection determine the signs of such effects which are reinforced or offset by competition for locations in the land market. Effects from changes in productivity levels and risk structure are also described.

Keywords: Natural disaster; Building codes; Self-insurance; Self-protection; Spatial equilibrium (search for similar items in EconPapers)
JEL-codes: Q54 R12 R52 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0928765512000632
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:resene:v:36:y:2014:i:1:p:209-228

DOI: 10.1016/j.reseneeco.2012.10.002

Access Statistics for this article

Resource and Energy Economics is currently edited by J. F. Shogren and S. Smulders

More articles in Resource and Energy Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().