Can natural disasters have positive consequences? Investigating the role of embodied technical change

Stephane Hallegatte and Patrice Dumas ()
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Patrice Dumas: LMD - Laboratoire de Météorologie Dynamique (UMR 8539) - UPMC - Université Pierre et Marie Curie - Paris 6 - INSU - CNRS - Institut national des sciences de l'Univers - X - École polytechnique - IP Paris - Institut Polytechnique de Paris - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - Département des Géosciences - ENS-PSL - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres

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Abstract: It has been suggested that disasters might have positive economic consequences, through the accelerated replacement of capital. This possibility is referred to as the productivity effect. This effect is investigated using a model with embodied technical change. in this framework, disasters can influence the production level but cannot influence the growth rate, in the same way than the saving ratio in a Solow-like model. Depending on reconstruction quality, indeed, accounting for embodied technical change can either decrease or increase disaster costs, but is never able to turn disasters into positive events. Moreover, a better but slower reconstruction amplifies the short-term consequences of disasters, but pays off over the long-term. Regardless, the productivity effect cannot prevent the existence of a bifurcation when disaster damages exceed the reconstruction capacity, potentially leading to poverty traps. (C) 2008 Elsevier B.V. All rights reserved.

Keywords: Embodied technical change; Natural disasters; Economic impacts (search for similar items in EconPapers)
Date: 2009-01
Note: View the original document on HAL open archive server: https://enpc.hal.science/hal-00719266v1
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Published in Ecological Economics, 2009, 68 (3), pp.777-786. ⟨10.1016/j.ecolecon.2008.06.011⟩

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Journal Article: Can natural disasters have positive consequences? Investigating the role of embodied technical change (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-00719266

DOI: 10.1016/j.ecolecon.2008.06.011

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