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The economics of natural disasters

S. Hallegatte, V. Przyluski, CESifo Forum 2/2010, pp. 14—24

jeudi 29 juillet 2010, par Stéphane Hallegatte

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This article proposes a definition of the cost of a disaster, and emphasizes the most important mechanisms that explain this cost. It does so by first explaining why the direct economic cost, i.e. the value of what has been damaged or destroyed by the disaster, is not a good indicator of disaster seriousness and why estimating indirect losses is crucial. Then, it describes the main indirect consequences of a disaster and of the following reconstruction phase, and discusses the methodologies to measure them. Finally, it proposes a review of published assessments of indirect economic consequences, which confirm their importance and the need to take them into account.

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