This project hence develops a new dynamic and stochastic macroeconomic framework capable of analysing sustainable growth implications of climate extreme risk management in developing countries. The proposed dynamic macroeconomic model captures a 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 climate extreme risk and DRR investment. These changes will then affect other aspects of economic activities such as the optimal levels of saving and investment, demands for labor and capital, shares of import/export and ultimately a country’s GDP growth trajectory. The interaction between DRR investment and risk retention/transfer instruments will be analysed as policy scenarios in this study.
The project estimates the benefits of DRR as applied to coastal hazard management in Barbados in collaboration with the InterAmerican Development Bank (IDB).
Project Details:
Project duration: December 2019 - February 2021
Funding Partner: Inter-American Bank https://www.iadb.org/en
Additional relevant publications
Ishiwata, H., & Yokomatsu, M. (2018). Dynamic Stochastic Macroeconomic Model of Disaster Risk Reduction Investment in Developing Countries. Risk Analysis, 38(11), 2424-2440.
Yokomatsu, M. (2018). A Commentary on “Recovery from Catastrophe and Building Back Better (Takeuchi and Tanaka, 2016)”–Structure of Damage of Production Capital Stock on Normative Economic Process. Journal of Disaster Research, 13(3), 564-570.
CONTACT DETAILS
Senior Research Scholar Systemic Risk and Resilience Research Group - Advancing Systems Analysis Program
Senior Research Scholar Water Security Research Group - Biodiversity and Natural Resources Program
Research Group Leader and Senior Research Scholar Water Security Research Group - Biodiversity and Natural Resources Program
December 2019 - February 2021
PUBLICATIONS
International Institute for Applied Systems Analysis (IIASA)
Schlossplatz 1, A-2361 Laxenburg, Austria
Phone: (+43 2236) 807 0 Fax:(+43 2236) 71 313