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Macroeconomic co-benefits of DRR investment: assessment using the Dynamic Model of Multi-hazard Mitigation CoBenefits (DYNAMMICs) model

Muneta Yokomatsu (International Institute for Applied Systems Analysis, Laxenburg, Austria)
Junko Mochizuki (International Institute for Applied Systems Analysis, Laxenburg, Austria)
Julian Joseph (International Institute for Applied Systems Analysis, Laxenburg, Austria)
Peter Burek (International Institute for Applied Systems Analysis, Laxenburg, Austria)
Taher Kahil (International Institute for Applied Systems Analysis, Laxenburg, Austria)

Disaster Prevention and Management

ISSN: 0965-3562

Article publication date: 20 September 2022

Issue publication date: 14 June 2023

128

Abstract

Purpose

The authors present a dynamic macroeconomic model for assessment of disaster risk reduction (DRR) policies under multiple hazards. The model can be used to analyze and compare various potential policies in terms of their economic consequences. The decomposition of these effects into multiple benefits helps policy makers and other stakeholders better understand the ex ante and ex-post advantages of DRR investments. The purpose of this paper is to address these issues.

Design/methodology/approach

A dynamic real business cycle model is at the core of this research. In the model multiple natural hazards modeled stochastically cause shocks to the economy. Economic outcomes, most importantly, output can be assessed before and after disasters and under various DRR policies. The decomposition of benefits aims to quantify the concept of triple dividends.

Findings

In case study applications in Tanzania and Zambia, the authors find that investments into physical infrastructure and risk transfer instruments generate a variety of benefits even in the absence of disaster. A land use restriction with planned relocation for example reduces output in the short run but in the long run increases it. Overall, policy effects of various DRR interventions evolve in a nonmonotonic manner and should be evaluated over a long period of time using dynamic simulation.

Originality/value

The novelty of this study lies in the economic quantification of multiple benefits described in the triple dividends literature. This helps comparing ex ante, ex-post and volatility-related economic effects of multiple disasters and related physical and financial DRR investment options. As observed in the case studies, the model can also identify overlooked temporal heterogeneity of co-benefits of DRR investments.

Keywords

Acknowledgements

The following project partially supported this study: Distributional Implications of Climate-Related Disasters – A Macroeconomic Assessment (DIoD) (Jubiläumsfondsprojekt Nr. 18654).

Citation

Yokomatsu, M., Mochizuki, J., Joseph, J., Burek, P. and Kahil, T. (2023), "Macroeconomic co-benefits of DRR investment: assessment using the Dynamic Model of Multi-hazard Mitigation CoBenefits (DYNAMMICs) model", Disaster Prevention and Management, Vol. 32 No. 1, pp. 139-162. https://doi.org/10.1108/DPM-07-2022-0154

Publisher

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Emerald Publishing Limited

Copyright © 2022, Emerald Publishing Limited

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