Revisiting Arrow-Lind: Managing sovereign disaster risk

Mechler, R. ORCID: & Hochrainer-Stigler, S. (2014). Revisiting Arrow-Lind: Managing sovereign disaster risk. Journal of Natural Resources Policy Research 6 (1) 93-100. 10.1080/19390459.2013.873186.

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In their seminal paper of 1970, Kenneth Arrow and Robert Lind investigated how governments should treat uncertainty in the evaluation of public investment decisions. Their main argument was that if risks associated with a public investment are publicly borne (e.g., through taxation), the total cost of risk bearing is insignificant. Besides the risk spreading ability, they also argued that, as governments are able to pool a large number of assets, their risk portfolio is highly diversified. Consequently, Arrow and Lind (AL) suggested that governments can behave risk neutrally and evaluate their investments only through the expected net present (social) value.

Item Type: Article
Research Programs: Risk & Resilience (RISK)
Risk, Policy and Vulnerability (RPV)
Bibliographic Reference: Journal of Natural Resources Policy Research; 6(1):93-100 (Published online 21 January 2014)
Depositing User: IIASA Import
Date Deposited: 15 Jan 2016 08:51
Last Modified: 27 Aug 2021 17:24

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