Premium
The impact of natural and manmade disasters on household welfare
Author(s) -
Sawada Yasuyuki
Publication year - 2007
Publication title -
agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.29
H-Index - 82
eISSN - 1574-0862
pISSN - 0169-5150
DOI - 10.1111/j.1574-0862.2007.00235.x
Subject(s) - natural disaster , welfare , coping (psychology) , ex ante , risk management , actuarial science , business , emergency management , systematic risk , public economics , economics , economic growth , geography , finance , psychology , psychiatry , meteorology , market economy , macroeconomics
In this article, we provide selective evidence on the impact of natural and manmade disasters on household welfare. First, we consider ex ante risk management and ex post risk‐coping behaviors separately, showing evidence from the Asian economic crisis, earthquakes, and tsunami disasters. Second, we differentiate idiosyncratic risks from nondiversifiable aggregate risks that characterize a disaster. We also discuss the difficulties of designing index‐type insurance against natural disasters, which are often rare, unforeseen events. Then, we investigate the role of self‐insurance against large‐scale disasters under which formal or informal mutual insurance mechanisms are largely ineffective. Credit accessibility is identified as one of the key factors facilitating risk‐coping strategies.