A methodology for incorporating natural catastrophes into macroeconomic projections

Freeman PK, Martin LA, Mechler R, & Warner-Merl NK (2004). A methodology for incorporating natural catastrophes into macroeconomic projections. Disaster Prevention and Management 13 (4): 337-342. DOI:10.1108/09653560410556564.

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Abstract

This paper addresses a critical problem in macroeconomic planning for natural disaster losses: how to incorporate potential future losses into current planning activity. The authors develop a technique to integrate probabilistic natural hazard losses into macroeconomic planning models. Probabilistic losses to capital stock (direct losses) serve as input to a macroeconomic model, which consequently calculates the macroeconomic impacts. The macroeconomic effects calculated comprise the indirect effects of losing and not being able to replace capital stock sufficiently or in a timely manner, as well as the effects of diverting funds to relief and reconstruction activities. The modeling can serve as a tool for planning for the effects of natural disasters before they occur and for engaging in appropriate risk management activities.

Item Type: Article
Uncontrolled Keywords: Macroeconomics; Stochastic Modelling; Natural Disasters; Risk Management
Research Programs: Risk, Modeling and Society (RMS)
Bibliographic Reference: Disaster Prevention and Management; 13(4):337-342 [2004]
Depositing User: IIASA Import
Date Deposited: 15 Jan 2016 02:16
Last Modified: 23 Feb 2016 08:51
URI: http://pure.iiasa.ac.at/7121

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