Operations, Information and Decisions Papers

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Journal Article

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Risk Analysis





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Major natural disasters in recent years have had high human and economic costs, and triggered record high postdisaster relief from governments and international donors. Given the current economic situation worldwide, selecting the most effective disaster risk reduction (DRR) measures is critical. This is especially the case for low- and middle-income countries, which have suffered disproportionally more economic and human losses from disasters. This article discusses a methodology that makes use of advanced probabilistic catastrophe models to estimate benefits of DRR measures. We apply such newly developed models to generate estimates for hurricane risk on residential structures on the island of St. Lucia, and earthquake risk on residential structures in Istanbul, Turkey, as two illustrative case studies. The costs and economic benefits for selected risk reduction measures are estimated taking account of hazard, exposure, and vulnerability. We conclude by emphasizing the advantages and challenges of catastrophe model-based cost-benefit analyses for DRR in developing countries.

Copyright/Permission Statement

This is the peer reviewed version of the following article: Michel‐Kerjan, E., Hochrainer‐Stigler, S., Kunreuther, H., Linnerooth‐Bayer, J., Mechler, R., Muir‐Wood, R., ... & Young, M. (2013). Catastrophe risk models for evaluating disaster risk reduction investments in developing countries. Risk Analysis, 33(6), 984-999., which has been published in final form at http://onlinelibrary.wiley.com/doi/10.1111/j.1539-6924.2012.01928.x/abstract. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Self-Archiving [link to http://olabout.wiley.com/WileyCDA/Section/id-820227.html#terms].


Catastrophe modeling, cost-benefit analysis, disaster risk reduction



Date Posted: 27 November 2017

This document has been peer reviewed.