Probabilistic cost‐benefit analysis of disaster risk management in a development context |
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Authors: | Daniel Kull Reinhard Mechler Stefan Hochrainer‐Stigler |
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Institution: | 1. Senior Disaster Risk Management Specialist, Global Facility for Disaster Reduction and Recovery, The World Bank1, Switzerland;2. Group Leader, International Institute for Applied Systems Analysis and Vienna University of Economics and Business, Austria;3. Research Scholar, International Institute for Applied Systems Analysis, Austria |
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Abstract: | Limited studies have shown that disaster risk management (DRM) can be cost‐efficient in a development context. Cost–benefit analysis (CBA) is an evaluation tool to analyse economic efficiency. This research introduces quantitative, stochastic CBA frameworks and applies them in case studies of flood and drought risk reduction in India and Pakistan, while also incorporating projected climate change impacts. DRM interventions are shown to be economically efficient, with integrated approaches more cost‐effective and robust than singular interventions. The paper highlights that CBA can be a useful tool if certain issues are considered properly, including: complexities in estimating risk; data dependency of results; negative effects of interventions; and distributional aspects. The design and process of CBA must take into account specific objectives, available information, resources, and the perceptions and needs of stakeholders as transparently as possible. Intervention design and uncertainties should be qualified through dialogue, indicating that process is as important as numerical results. |
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Keywords: | climate change cost‐benefit analysis development disaster risk management India Pakistan |
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