The Indirect Cost of Natural Disasters and an Economic Definition of Macroeconomic Resilience
The welfare impact of a disaster does not depend only on the physical characteristics of the event or its direct impacts in terms of lost lives and assets. Depending on the ability of the economy to cope, recover, and reconstruct, the reconstruction will be more or less difficult, and the welfare effects smaller or larger. This ability, which can be referred to as the macroeconomic resilience of the economy to natural disasters, is an important parameter to estimate the overall vulnerability of a population. Here, resilience is decomposed into two components: instantaneous resilience, which is the ability to limit the magnitude of the immediate loss of income for a given amount of capital losses, and dynamic resilience, which is the ability to reconstruct and recover quickly. The paper proposes a rule of thumb to estimate macroeconomic resilience, based on the interest rate (a higher interest rate decreases resilience and increases welfare losses), the reconstruction duration (a longer reconstruction duration increases welfare losses), and a “ripple-effect” factor that increases or decreases immediate losses (negative if enough idle resources are available to cope; positive if cross-sector and supply-chain issues impair the production of non-affected capital). An optimal risk management strategy is very likely to include measures to reduce direct impacts (disaster risk reduction actions) and measures to reduce indirect impacts (resilience building actions).
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koha |
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Estados Unidos |
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Bibliográfico |
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Biblioteca del Banco Mundial |
| language |
English en_US |
| topic |
ECONOMIC SITUATION RISKS GENERAL EQUILIBRIUM ANALYSIS ECONOMIC GROWTH STORM DISASTER RISK REDUCTION FINANCIAL RETURNS PRODUCTION PRICE INCREASES SUPPLY CURVE RISK REDUCTION DISASTER SITUATIONS INCOME INTEREST PROBABILITY OF OCCURRENCE EXPECTATIONS STORMS ECONOMETRIC ANALYSES INTEREST RATE EXPORTS POLITICAL ECONOMY REVENUES WELFARE SUPPLY CURVES EQUILIBRIUM MODELS DISASTER DISTRIBUTIONAL EFFECTS MARGINAL PRODUCTIVITY DAMAGES PRICE INPUTS INTEREST RATE ECONOMIC EQUILIBRIUM PAYMENTS WEALTH RISK AVERSE ECONOMIC LOSS VALUE OF OUTPUT HURRICANES SAFETY NETS SMALL BUSINESS PRESENT VALUE REDISTRIBUTIVE EFFECTS INFLUENCE CONSUMER SURPLUS TSUNAMI PRODUCTION FUNCTION NATURAL DISASTER MORAL HAZARD FLOODS RENT PRODUCTIVITY ECONOMETRICS EXTERNALITIES NATURAL DISASTERS DEMAND CURVES CRITERIA MARKETS DEBT ADVERSE CONSEQUENCES DISASTERS DIRECT VALUE DISASTER REDUCTION TAX REVENUES ECONOMIC MODELS INVENTORIES UTILITY DISCOUNTED VALUE GROSS DOMESTIC PRODUCT FINANCE SUPPLY CURVE ECONOMIC RESEARCH POSITIVE EXTERNALITY EQUILIBRIUM ANALYSIS GROWTH THEORIES TOTAL OUTPUT EXTERNALITY DROUGHTS BENEFIT‐COST ANALYSIS CONSUMPTION EARTHQUAKE ASSET VALUE DISASTER REDUCTION CAPITAL WAGES DISASTER RISK CLIMATE CHANGE VALUE ECONOMIC VALUE PRODUCTION FUNCTIONS CREDIT EXTREME EVENTS DISASTER RISK FINANCING CLIMATE ECONOMIC SECTORS DEMAND NATIONAL INCOME PRODUCTIVE ASSETS CONSUMERS ECONOMY DEMAND CURVE NATURAL DISASTER GROSS DOMESTIC PRODUCT MEASUREMENT ASSETS MARKET MARGINAL PRODUCTIVITY ECONOMIC VALUE ECONOMIC THEORY FLOOD PRICE INCREASE ECONOMIC SITUATION EMERGENCY SERVICES ADVERSE CONSEQUENCES PRODUCTION FUNCTION POLICY ECONOMIC MODELS ECONOMIC SYSTEMS ECONOMIC EQUILIBRIUM INSURANCE BUSINESS CYCLES TRADE GDP GOODS THEORY GENERAL EQUILIBRIUM ANALYSIS AVERAGE PRODUCTIVITY HURRICANE ECONOMIC THEORY ACCIDENTS CONSUMER SURPLUS ECONOMIC SECTORS POSITIVE EXTERNALITY EMERGENCY SERVICES SUPPLY DISASTER RISK REDUCTION ECONOMIC INDICATORS INVESTMENTS RISK MANAGEMENT DISASTER RISK INSURANCE COMPANIES TOTAL OUTPUT AVERAGE PRODUCTIVITY LAND‐USE COST ANALYSIS PRICES ECONOMIC STATISTICS RECONSTRUCTION BENEFITS ECONOMIC PERSPECTIVE NATURAL DISASTERS DEVELOPMENT POLICY REDISTRIBUTIVE EFFECTS ECONOMIC SITUATION RISKS GENERAL EQUILIBRIUM ANALYSIS ECONOMIC GROWTH STORM DISASTER RISK REDUCTION FINANCIAL RETURNS PRODUCTION PRICE INCREASES SUPPLY CURVE RISK REDUCTION DISASTER SITUATIONS INCOME INTEREST PROBABILITY OF OCCURRENCE EXPECTATIONS STORMS ECONOMETRIC ANALYSES INTEREST RATE EXPORTS POLITICAL ECONOMY REVENUES WELFARE SUPPLY CURVES EQUILIBRIUM MODELS DISASTER DISTRIBUTIONAL EFFECTS MARGINAL PRODUCTIVITY DAMAGES PRICE INPUTS INTEREST RATE ECONOMIC EQUILIBRIUM PAYMENTS WEALTH RISK AVERSE ECONOMIC LOSS VALUE OF OUTPUT HURRICANES SAFETY NETS SMALL BUSINESS PRESENT VALUE REDISTRIBUTIVE EFFECTS INFLUENCE CONSUMER SURPLUS TSUNAMI PRODUCTION FUNCTION NATURAL DISASTER MORAL HAZARD FLOODS RENT PRODUCTIVITY ECONOMETRICS EXTERNALITIES NATURAL DISASTERS DEMAND CURVES CRITERIA MARKETS DEBT ADVERSE CONSEQUENCES DISASTERS DIRECT VALUE DISASTER REDUCTION TAX REVENUES ECONOMIC MODELS INVENTORIES UTILITY DISCOUNTED VALUE GROSS DOMESTIC PRODUCT FINANCE SUPPLY CURVE ECONOMIC RESEARCH POSITIVE EXTERNALITY EQUILIBRIUM ANALYSIS GROWTH THEORIES TOTAL OUTPUT EXTERNALITY DROUGHTS BENEFIT‐COST ANALYSIS CONSUMPTION EARTHQUAKE ASSET VALUE DISASTER REDUCTION CAPITAL WAGES DISASTER RISK CLIMATE CHANGE VALUE ECONOMIC VALUE PRODUCTION FUNCTIONS CREDIT EXTREME EVENTS DISASTER RISK FINANCING CLIMATE ECONOMIC SECTORS DEMAND NATIONAL INCOME PRODUCTIVE ASSETS CONSUMERS ECONOMY DEMAND CURVE NATURAL DISASTER GROSS DOMESTIC PRODUCT MEASUREMENT ASSETS MARKET MARGINAL PRODUCTIVITY ECONOMIC VALUE ECONOMIC THEORY FLOOD PRICE INCREASE ECONOMIC SITUATION EMERGENCY SERVICES ADVERSE CONSEQUENCES PRODUCTION FUNCTION POLICY ECONOMIC MODELS ECONOMIC SYSTEMS ECONOMIC EQUILIBRIUM INSURANCE BUSINESS CYCLES TRADE GDP GOODS THEORY GENERAL EQUILIBRIUM ANALYSIS AVERAGE PRODUCTIVITY HURRICANE ECONOMIC THEORY ACCIDENTS CONSUMER SURPLUS ECONOMIC SECTORS POSITIVE EXTERNALITY EMERGENCY SERVICES SUPPLY DISASTER RISK REDUCTION ECONOMIC INDICATORS INVESTMENTS RISK MANAGEMENT DISASTER RISK INSURANCE COMPANIES TOTAL OUTPUT AVERAGE PRODUCTIVITY LAND‐USE COST ANALYSIS PRICES ECONOMIC STATISTICS RECONSTRUCTION BENEFITS ECONOMIC PERSPECTIVE NATURAL DISASTERS DEVELOPMENT POLICY REDISTRIBUTIVE EFFECTS |
| spellingShingle |
ECONOMIC SITUATION RISKS GENERAL EQUILIBRIUM ANALYSIS ECONOMIC GROWTH STORM DISASTER RISK REDUCTION FINANCIAL RETURNS PRODUCTION PRICE INCREASES SUPPLY CURVE RISK REDUCTION DISASTER SITUATIONS INCOME INTEREST PROBABILITY OF OCCURRENCE EXPECTATIONS STORMS ECONOMETRIC ANALYSES INTEREST RATE EXPORTS POLITICAL ECONOMY REVENUES WELFARE SUPPLY CURVES EQUILIBRIUM MODELS DISASTER DISTRIBUTIONAL EFFECTS MARGINAL PRODUCTIVITY DAMAGES PRICE INPUTS INTEREST RATE ECONOMIC EQUILIBRIUM PAYMENTS WEALTH RISK AVERSE ECONOMIC LOSS VALUE OF OUTPUT HURRICANES SAFETY NETS SMALL BUSINESS PRESENT VALUE REDISTRIBUTIVE EFFECTS INFLUENCE CONSUMER SURPLUS TSUNAMI PRODUCTION FUNCTION NATURAL DISASTER MORAL HAZARD FLOODS RENT PRODUCTIVITY ECONOMETRICS EXTERNALITIES NATURAL DISASTERS DEMAND CURVES CRITERIA MARKETS DEBT ADVERSE CONSEQUENCES DISASTERS DIRECT VALUE DISASTER REDUCTION TAX REVENUES ECONOMIC MODELS INVENTORIES UTILITY DISCOUNTED VALUE GROSS DOMESTIC PRODUCT FINANCE SUPPLY CURVE ECONOMIC RESEARCH POSITIVE EXTERNALITY EQUILIBRIUM ANALYSIS GROWTH THEORIES TOTAL OUTPUT EXTERNALITY DROUGHTS BENEFIT‐COST ANALYSIS CONSUMPTION EARTHQUAKE ASSET VALUE DISASTER REDUCTION CAPITAL WAGES DISASTER RISK CLIMATE CHANGE VALUE ECONOMIC VALUE PRODUCTION FUNCTIONS CREDIT EXTREME EVENTS DISASTER RISK FINANCING CLIMATE ECONOMIC SECTORS DEMAND NATIONAL INCOME PRODUCTIVE ASSETS CONSUMERS ECONOMY DEMAND CURVE NATURAL DISASTER GROSS DOMESTIC PRODUCT MEASUREMENT ASSETS MARKET MARGINAL PRODUCTIVITY ECONOMIC VALUE ECONOMIC THEORY FLOOD PRICE INCREASE ECONOMIC SITUATION EMERGENCY SERVICES ADVERSE CONSEQUENCES PRODUCTION FUNCTION POLICY ECONOMIC MODELS ECONOMIC SYSTEMS ECONOMIC EQUILIBRIUM INSURANCE BUSINESS CYCLES TRADE GDP GOODS THEORY GENERAL EQUILIBRIUM ANALYSIS AVERAGE PRODUCTIVITY HURRICANE ECONOMIC THEORY ACCIDENTS CONSUMER SURPLUS ECONOMIC SECTORS POSITIVE EXTERNALITY EMERGENCY SERVICES SUPPLY DISASTER RISK REDUCTION ECONOMIC INDICATORS INVESTMENTS RISK MANAGEMENT DISASTER RISK INSURANCE COMPANIES TOTAL OUTPUT AVERAGE PRODUCTIVITY LAND‐USE COST ANALYSIS PRICES ECONOMIC STATISTICS RECONSTRUCTION BENEFITS ECONOMIC PERSPECTIVE NATURAL DISASTERS DEVELOPMENT POLICY REDISTRIBUTIVE EFFECTS ECONOMIC SITUATION RISKS GENERAL EQUILIBRIUM ANALYSIS ECONOMIC GROWTH STORM DISASTER RISK REDUCTION FINANCIAL RETURNS PRODUCTION PRICE INCREASES SUPPLY CURVE RISK REDUCTION DISASTER SITUATIONS INCOME INTEREST PROBABILITY OF OCCURRENCE EXPECTATIONS STORMS ECONOMETRIC ANALYSES INTEREST RATE EXPORTS POLITICAL ECONOMY REVENUES WELFARE SUPPLY CURVES EQUILIBRIUM MODELS DISASTER DISTRIBUTIONAL EFFECTS MARGINAL PRODUCTIVITY DAMAGES PRICE INPUTS INTEREST RATE ECONOMIC EQUILIBRIUM PAYMENTS WEALTH RISK AVERSE ECONOMIC LOSS VALUE OF OUTPUT HURRICANES SAFETY NETS SMALL BUSINESS PRESENT VALUE REDISTRIBUTIVE EFFECTS INFLUENCE CONSUMER SURPLUS TSUNAMI PRODUCTION FUNCTION NATURAL DISASTER MORAL HAZARD FLOODS RENT PRODUCTIVITY ECONOMETRICS EXTERNALITIES NATURAL DISASTERS DEMAND CURVES CRITERIA MARKETS DEBT ADVERSE CONSEQUENCES DISASTERS DIRECT VALUE DISASTER REDUCTION TAX REVENUES ECONOMIC MODELS INVENTORIES UTILITY DISCOUNTED VALUE GROSS DOMESTIC PRODUCT FINANCE SUPPLY CURVE ECONOMIC RESEARCH POSITIVE EXTERNALITY EQUILIBRIUM ANALYSIS GROWTH THEORIES TOTAL OUTPUT EXTERNALITY DROUGHTS BENEFIT‐COST ANALYSIS CONSUMPTION EARTHQUAKE ASSET VALUE DISASTER REDUCTION CAPITAL WAGES DISASTER RISK CLIMATE CHANGE VALUE ECONOMIC VALUE PRODUCTION FUNCTIONS CREDIT EXTREME EVENTS DISASTER RISK FINANCING CLIMATE ECONOMIC SECTORS DEMAND NATIONAL INCOME PRODUCTIVE ASSETS CONSUMERS ECONOMY DEMAND CURVE NATURAL DISASTER GROSS DOMESTIC PRODUCT MEASUREMENT ASSETS MARKET MARGINAL PRODUCTIVITY ECONOMIC VALUE ECONOMIC THEORY FLOOD PRICE INCREASE ECONOMIC SITUATION EMERGENCY SERVICES ADVERSE CONSEQUENCES PRODUCTION FUNCTION POLICY ECONOMIC MODELS ECONOMIC SYSTEMS ECONOMIC EQUILIBRIUM INSURANCE BUSINESS CYCLES TRADE GDP GOODS THEORY GENERAL EQUILIBRIUM ANALYSIS AVERAGE PRODUCTIVITY HURRICANE ECONOMIC THEORY ACCIDENTS CONSUMER SURPLUS ECONOMIC SECTORS POSITIVE EXTERNALITY EMERGENCY SERVICES SUPPLY DISASTER RISK REDUCTION ECONOMIC INDICATORS INVESTMENTS RISK MANAGEMENT DISASTER RISK INSURANCE COMPANIES TOTAL OUTPUT AVERAGE PRODUCTIVITY LAND‐USE COST ANALYSIS PRICES ECONOMIC STATISTICS RECONSTRUCTION BENEFITS ECONOMIC PERSPECTIVE NATURAL DISASTERS DEVELOPMENT POLICY REDISTRIBUTIVE EFFECTS Hallegatte, Stephane The Indirect Cost of Natural Disasters and an Economic Definition of Macroeconomic Resilience |
| description |
The welfare impact of a disaster does
not depend only on the physical characteristics of the event
or its direct impacts in terms of lost lives and assets.
Depending on the ability of the economy to cope, recover,
and reconstruct, the reconstruction will be more or less
difficult, and the welfare effects smaller or larger. This
ability, which can be referred to as the macroeconomic
resilience of the economy to natural disasters, is an
important parameter to estimate the overall vulnerability of
a population. Here, resilience is decomposed into two
components: instantaneous resilience, which is the ability
to limit the magnitude of the immediate loss of income for a
given amount of capital losses, and dynamic resilience,
which is the ability to reconstruct and recover quickly. The
paper proposes a rule of thumb to estimate macroeconomic
resilience, based on the interest rate (a higher interest
rate decreases resilience and increases welfare losses), the
reconstruction duration (a longer reconstruction duration
increases welfare losses), and a “ripple-effect” factor that
increases or decreases immediate losses (negative if enough
idle resources are available to cope; positive if
cross-sector and supply-chain issues impair the production
of non-affected capital). An optimal risk management
strategy is very likely to include measures to reduce direct
impacts (disaster risk reduction actions) and measures to
reduce indirect impacts (resilience building actions). |
| format |
Working Paper |
| topic_facet |
ECONOMIC SITUATION RISKS GENERAL EQUILIBRIUM ANALYSIS ECONOMIC GROWTH STORM DISASTER RISK REDUCTION FINANCIAL RETURNS PRODUCTION PRICE INCREASES SUPPLY CURVE RISK REDUCTION DISASTER SITUATIONS INCOME INTEREST PROBABILITY OF OCCURRENCE EXPECTATIONS STORMS ECONOMETRIC ANALYSES INTEREST RATE EXPORTS POLITICAL ECONOMY REVENUES WELFARE SUPPLY CURVES EQUILIBRIUM MODELS DISASTER DISTRIBUTIONAL EFFECTS MARGINAL PRODUCTIVITY DAMAGES PRICE INPUTS INTEREST RATE ECONOMIC EQUILIBRIUM PAYMENTS WEALTH RISK AVERSE ECONOMIC LOSS VALUE OF OUTPUT HURRICANES SAFETY NETS SMALL BUSINESS PRESENT VALUE REDISTRIBUTIVE EFFECTS INFLUENCE CONSUMER SURPLUS TSUNAMI PRODUCTION FUNCTION NATURAL DISASTER MORAL HAZARD FLOODS RENT PRODUCTIVITY ECONOMETRICS EXTERNALITIES NATURAL DISASTERS DEMAND CURVES CRITERIA MARKETS DEBT ADVERSE CONSEQUENCES DISASTERS DIRECT VALUE DISASTER REDUCTION TAX REVENUES ECONOMIC MODELS INVENTORIES UTILITY DISCOUNTED VALUE GROSS DOMESTIC PRODUCT FINANCE SUPPLY CURVE ECONOMIC RESEARCH POSITIVE EXTERNALITY EQUILIBRIUM ANALYSIS GROWTH THEORIES TOTAL OUTPUT EXTERNALITY DROUGHTS BENEFIT‐COST ANALYSIS CONSUMPTION EARTHQUAKE ASSET VALUE DISASTER REDUCTION CAPITAL WAGES DISASTER RISK CLIMATE CHANGE VALUE ECONOMIC VALUE PRODUCTION FUNCTIONS CREDIT EXTREME EVENTS DISASTER RISK FINANCING CLIMATE ECONOMIC SECTORS DEMAND NATIONAL INCOME PRODUCTIVE ASSETS CONSUMERS ECONOMY DEMAND CURVE NATURAL DISASTER GROSS DOMESTIC PRODUCT MEASUREMENT ASSETS MARKET MARGINAL PRODUCTIVITY ECONOMIC VALUE ECONOMIC THEORY FLOOD PRICE INCREASE ECONOMIC SITUATION EMERGENCY SERVICES ADVERSE CONSEQUENCES PRODUCTION FUNCTION POLICY ECONOMIC MODELS ECONOMIC SYSTEMS ECONOMIC EQUILIBRIUM INSURANCE BUSINESS CYCLES TRADE GDP GOODS THEORY GENERAL EQUILIBRIUM ANALYSIS AVERAGE PRODUCTIVITY HURRICANE ECONOMIC THEORY ACCIDENTS CONSUMER SURPLUS ECONOMIC SECTORS POSITIVE EXTERNALITY EMERGENCY SERVICES SUPPLY DISASTER RISK REDUCTION ECONOMIC INDICATORS INVESTMENTS RISK MANAGEMENT DISASTER RISK INSURANCE COMPANIES TOTAL OUTPUT AVERAGE PRODUCTIVITY LAND‐USE COST ANALYSIS PRICES ECONOMIC STATISTICS RECONSTRUCTION BENEFITS ECONOMIC PERSPECTIVE NATURAL DISASTERS DEVELOPMENT POLICY REDISTRIBUTIVE EFFECTS |
| author |
Hallegatte, Stephane |
| author_facet |
Hallegatte, Stephane |
| author_sort |
Hallegatte, Stephane |
| title |
The Indirect Cost of Natural Disasters and an Economic Definition of Macroeconomic Resilience |
| title_short |
The Indirect Cost of Natural Disasters and an Economic Definition of Macroeconomic Resilience |
| title_full |
The Indirect Cost of Natural Disasters and an Economic Definition of Macroeconomic Resilience |
| title_fullStr |
The Indirect Cost of Natural Disasters and an Economic Definition of Macroeconomic Resilience |
| title_full_unstemmed |
The Indirect Cost of Natural Disasters and an Economic Definition of Macroeconomic Resilience |
| title_sort |
indirect cost of natural disasters and an economic definition of macroeconomic resilience |
| publisher |
World Bank, Washington, DC |
| publishDate |
2015-07 |
| url |
http://documents.worldbank.org/curated/en/2015/07/24744802/indirect-cost-natural-disasters-economic-definition-macroeconomic-resilience https://hdl.handle.net/10986/22238 |
| work_keys_str_mv |
AT hallegattestephane theindirectcostofnaturaldisastersandaneconomicdefinitionofmacroeconomicresilience AT hallegattestephane indirectcostofnaturaldisastersandaneconomicdefinitionofmacroeconomicresilience |
| _version_ |
1807158174943281152 |
| spelling |
dig-okr-10986222382024-08-07T20:22:54Z The Indirect Cost of Natural Disasters and an Economic Definition of Macroeconomic Resilience Hallegatte, Stephane ECONOMIC SITUATION RISKS GENERAL EQUILIBRIUM ANALYSIS ECONOMIC GROWTH STORM DISASTER RISK REDUCTION FINANCIAL RETURNS PRODUCTION PRICE INCREASES SUPPLY CURVE RISK REDUCTION DISASTER SITUATIONS INCOME INTEREST PROBABILITY OF OCCURRENCE EXPECTATIONS STORMS ECONOMETRIC ANALYSES INTEREST RATE EXPORTS POLITICAL ECONOMY REVENUES WELFARE SUPPLY CURVES EQUILIBRIUM MODELS DISASTER DISTRIBUTIONAL EFFECTS MARGINAL PRODUCTIVITY DAMAGES PRICE INPUTS INTEREST RATE ECONOMIC EQUILIBRIUM PAYMENTS WEALTH RISK AVERSE ECONOMIC LOSS VALUE OF OUTPUT HURRICANES SAFETY NETS SMALL BUSINESS PRESENT VALUE REDISTRIBUTIVE EFFECTS INFLUENCE CONSUMER SURPLUS TSUNAMI PRODUCTION FUNCTION NATURAL DISASTER MORAL HAZARD FLOODS RENT PRODUCTIVITY ECONOMETRICS EXTERNALITIES NATURAL DISASTERS DEMAND CURVES CRITERIA MARKETS DEBT ADVERSE CONSEQUENCES DISASTERS DIRECT VALUE DISASTER REDUCTION TAX REVENUES ECONOMIC MODELS INVENTORIES UTILITY DISCOUNTED VALUE GROSS DOMESTIC PRODUCT FINANCE SUPPLY CURVE ECONOMIC RESEARCH POSITIVE EXTERNALITY EQUILIBRIUM ANALYSIS GROWTH THEORIES TOTAL OUTPUT EXTERNALITY DROUGHTS BENEFIT‐COST ANALYSIS CONSUMPTION EARTHQUAKE ASSET VALUE DISASTER REDUCTION CAPITAL WAGES DISASTER RISK CLIMATE CHANGE VALUE ECONOMIC VALUE PRODUCTION FUNCTIONS CREDIT EXTREME EVENTS DISASTER RISK FINANCING CLIMATE ECONOMIC SECTORS DEMAND NATIONAL INCOME PRODUCTIVE ASSETS CONSUMERS ECONOMY DEMAND CURVE NATURAL DISASTER GROSS DOMESTIC PRODUCT MEASUREMENT ASSETS MARKET MARGINAL PRODUCTIVITY ECONOMIC VALUE ECONOMIC THEORY FLOOD PRICE INCREASE ECONOMIC SITUATION EMERGENCY SERVICES ADVERSE CONSEQUENCES PRODUCTION FUNCTION POLICY ECONOMIC MODELS ECONOMIC SYSTEMS ECONOMIC EQUILIBRIUM INSURANCE BUSINESS CYCLES TRADE GDP GOODS THEORY GENERAL EQUILIBRIUM ANALYSIS AVERAGE PRODUCTIVITY HURRICANE ECONOMIC THEORY ACCIDENTS CONSUMER SURPLUS ECONOMIC SECTORS POSITIVE EXTERNALITY EMERGENCY SERVICES SUPPLY DISASTER RISK REDUCTION ECONOMIC INDICATORS INVESTMENTS RISK MANAGEMENT DISASTER RISK INSURANCE COMPANIES TOTAL OUTPUT AVERAGE PRODUCTIVITY LAND‐USE COST ANALYSIS PRICES ECONOMIC STATISTICS RECONSTRUCTION BENEFITS ECONOMIC PERSPECTIVE NATURAL DISASTERS DEVELOPMENT POLICY REDISTRIBUTIVE EFFECTS The welfare impact of a disaster does not depend only on the physical characteristics of the event or its direct impacts in terms of lost lives and assets. Depending on the ability of the economy to cope, recover, and reconstruct, the reconstruction will be more or less difficult, and the welfare effects smaller or larger. This ability, which can be referred to as the macroeconomic resilience of the economy to natural disasters, is an important parameter to estimate the overall vulnerability of a population. Here, resilience is decomposed into two components: instantaneous resilience, which is the ability to limit the magnitude of the immediate loss of income for a given amount of capital losses, and dynamic resilience, which is the ability to reconstruct and recover quickly. The paper proposes a rule of thumb to estimate macroeconomic resilience, based on the interest rate (a higher interest rate decreases resilience and increases welfare losses), the reconstruction duration (a longer reconstruction duration increases welfare losses), and a “ripple-effect” factor that increases or decreases immediate losses (negative if enough idle resources are available to cope; positive if cross-sector and supply-chain issues impair the production of non-affected capital). An optimal risk management strategy is very likely to include measures to reduce direct impacts (disaster risk reduction actions) and measures to reduce indirect impacts (resilience building actions). 2015-07-20T16:34:32Z 2015-07-20T16:34:32Z 2015-07 Working Paper Document de travail Documento de trabajo http://documents.worldbank.org/curated/en/2015/07/24744802/indirect-cost-natural-disasters-economic-definition-macroeconomic-resilience https://hdl.handle.net/10986/22238 English en_US Policy Research Working Paper;No. 7357 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank application/pdf text/plain World Bank, Washington, DC |