DYNAMMICs
Promoting sustainable development while managing disaster risk effectively is one of the key challenges of our time. Hazards such as floods and droughts affect millions of people globally, threatening lives, destroying assets and hampering prospects for resilient future. Disaster risk reduction (DRR) investment is hence needed to safeguard our lives and assets. Such investment is increasingly known not only reduces risk, but also to bring a number of co-benefits, such as wetland restoration that reduces extreme water flow and improves the environment or multi-purpose buildings that provide shelters and community space.
The DYNAMMICs is a new macroeconomic growth model that evaluates these co-benefits of DRR investments. The DYNAMMICs captures forward-looking rational expectation of a representative household and firm, whose perception of future earnings and losses will be affected by the prevailing levels of disaster risk and DRR investment. The changes in expected utility of households and expected profit of production sectors will then affect other aspects of economic activities such as the optimal levels of savings and investment, demands for labor and capital, shares of import/export and ultimately a country’s GDP growth trajectory. The DYNAMMICs has been developed as part of the project on DRR CoBenefit, and it is now being applied to case studies of flood and drought risk management in Angola, Tanzania, Rwanda, and Zambia.
