Fabian Barthel

Normalizing economic loss from natural disasters: A global analysis

Climate change is likely to lead to an increase in the frequency and/or intensity of certain types of natural hazards, if not globally, then at least in certain regions. All other things equal, this should lead to an increase in the economic toll from natural disasters over time. Yet, all other things are not equal since affected areas become wealthier over time and rational individuals and governments undertake defensive mitigation measures, which requires normalizing economic losses if one wishes to analyze trends in economic loss from natural disasters for detecting a potential climate change signal. In this article, we argue that the conventional methodology for normalizing economic loss is problematic since it normalizes for changes in wealth over time, but fails to normalize for differences in wealth across space at any given point of time. We introduce an alternative methodology that overcomes this problem in theory, but faces many more problems in its empirical application. Applying, therefore, both methods to the most comprehensive existing global dataset of natural disaster loss, in general we find no significant upward trends in normalized disaster damage over the period 1980 to 2009 globally, regionally, for specific disasters or for specific disasters in specific regions. Due to our inability to control for defensive mitigation measures, one cannot infer from our analysis that there have definitely not been more frequent and/or more intensive weather-related natural hazards over the study period already. Moreover, it may still be far too early to detect a trend if humaninduced climate change has only just started and will gain momentum over time.

The political economy of natural disaster damage

Abstract Economic damage from natural hazards can sometimes be prevented and always mitigated. However, private individuals tend to underinvest in such measures due to problems of collective action, information asymmetry and myopic behavior. Governments, which can in principle correct these market failures, themselves face incentives to underinvest in costly disaster prevention policies and damage mitigation regulations. Yet, disaster damage varies greatly across countries. We argue that rational actors will invest more in trying to prevent and mitigate damage the larger a countrys propensity to experience frequent and strong natural hazards. Accordingly, economic loss from an actually occurring disaster will be smaller the larger a countrys disaster propensity – holding everything else equal, such as hazard magnitude, the countrys total wealth and per capita income. At the same time, damage is not entirely preventable and smaller losses tend to be random. Disaster propensity will therefore have a larger marginal effect on larger predicted damages than on smaller ones. We employ quantile regression analysis in a global sample to test these predictions, focusing on the three disaster types causing the vast majority of damage worldwide: earthquakes, floods and tropical cyclones.

A Trend Analysis of Normalized Insured Damage from Natural Disasters

As the world becomes wealthier over time, inflation-adjusted insured damages from natural disasters go up as well. This article analyzes whether there is still a significant upward trend once insured natural disaster loss has been normalized. By scaling up loss from past disasters, normalization adjusts for the fact that a hazard event of equal strength will typically cause more damage nowadays than in past years because of wealth accumulation over time. A trend analysis of normalized insured damage from natural disasters is not only of interest to the insurance industry, but can potentially be useful for attempts at detecting whether there has been an increase in the frequency and/or intensity of natural hazards, whether caused by natural climate variability or anthropogenic climate change. We analyze trends at the global level over the period 1990 to 2008, over the period 1980 to 2008 for West Germany and 1973 to 2008 for the United States. We find no significant trends at the global level, but we detect statistically significant upward trends in normalized insured losses from all non-geophysical disasters as well as from certain specific disaster types in the United States and West Germany.

The Characteristics and Determinants of FDI in Ghana

Foreign Direct Investment (FDI) can be a valuable tool for development. However, not all forms of FDI are equally beneficial for the host country. The paper analyses the characteristics and determinants of FDI in a typical developing country: Ghana. Moreover, key policy areas are indicated, in order to enable Ghana both to attract more FDI and to increase the benefits from these capital inflows. The analysis combines qualitative and quantitative methods and is partly based on data retrieved from the World Banks 2007 Enterprise Survey, and partly on our own survey of 54 multinational enterprises operating in Ghana.

Spatial Dependence in Asylum Migration

Existing refugees in a destination country from the same source country reduce the uncertainty faced by subsequent asylum migrants since existing refugees can provide information and assistance. We argue that such network effects extend beyond the borders of specific source countries. Potential asylum migrants might also be able to draw on networks from geographically proximate as well as linguistically similar countries and from countries having previously been colonized by the same destination country, thus creating spatial dependence in asylum migration among source countries. Many destination countries meanwhile aspire to reduce the inflow of migrants by tightening their asylum policies. Target countries which restrict their policies relatively more than other destinations deflect some asylum migrants to geographically proximate destination countries, thus creating spatial dependence among target countries. We find evidence for both types of spatial dependence in our global analysis of asylum migration. However, while statistically significant, the degree of spatial dependence among target countries is modest. On the source side, there is evidence for modest spatial dependence among linguistically similar countries and no evidence for spatial dependence among countries which were previously colonized by the same destination country. By contrast, we find substantial spatial dependence among geographically proximate source countries

The Political Economy of Natural Disaster Damage

Economic damage from natural hazards can sometimes be prevented and always mitigated. However, private individuals tend to underinvest in such measures due to problems of collective action, information asymmetry and myopic behavior. Governments, which can in principle correct these market failures, themselves face incentives to underinvest in costly disaster prevention policies and damage mitigation regulations. Yet, disaster damage varies greatly across countries. We argue that rational actors will invest more in trying to prevent and mitigate damage the larger a countrys propensity to experience frequent and strong natural hazards. Accordingly, economic loss from an actually occurring disaster will be smaller the larger a countrys disaster propensity - holding everything else equal, such as hazard magnitude, the countrys total wealth and per capita income. At the same time, damage is not entirely preventable and smaller losses tend to be random. Disaster propensity will therefore have a larger marginal effect on larger predicted damages than on smaller ones. We employ quantile regression analysis in a global sample to test these predictions, focusing on the three disaster types causing the vast majority of damage worldwide: earthquakes, floods and tropical cyclones.

Regional Competition and Knowledge Spillovers - Spatial Dependence in International Football Success

The extent to which members of a national team play for a club in a foreign country has been increasing over the last 15 years tremendously. The aim of this paper is to examine empirically the existence of two potential spill-over effects: First, since the members of a confederation compete directly for spots in continental championships as well as in the World Cup and since national rivalry is generally greatest among geographically close countries, it is tested whether a countrys national football teams performance is affected by changes in the performance of other nations which are geographically close. Second, knowledge spill-over, which will presumably occur if a national team member plays in a high performing foreign league, are estimated. We find consistent evidence for positive spillovers between national teams of geographically close countries. Around half of the effect can be explained through global player migration.