Muneta Yokomatsu

Role of Local Festivals on Network Formation among a Variety of Residents in a Community

Community activities, such as local festivals, which get residents to collaborate with each other, can enable them to start interacting with others whom they have never interacted with before. This is because festivals exist in a context that is independent of daily jobs or hobbies of residents. This study develops a social network model with the assumption that (i) each players knowledge and experience is endogenously determined through a network and (ii) players have various preferences for the heterogeneity of this knowledge and experience. We carry out numerical simulations to illustrate the dynamic process of interaction among players. Furthermore, we investigate the dynamic effect of exogenous link addition by festivals on network formation and utility of each player, and evaluate the value of festivals.

Agricultural production behavior under premium subsidy: Incorporating crop price when subsistence constraint holds

Producers’ acreage decisions in response to the availability of insurance and government subsidy has been a topic of considerable attention. This study revisits the issue of agriculture producers’ production behavior under crop insurance and premium subsidy conditions. The discussion begins by differentiating between the assumptions of the classic insurance model and that model’s application to crop insurance. A discussion of a closed dual economy model follows. Price difference in cases of disaster and no disaster essentially determines producers’ response to the availability of a premium subsidy. A producer can obtain higher production revenue due to the significant increase in price induced by yield loss if the economy is closed and a subsistence constraint is taken into account. In this case, a premium subsidy could induce producers to lower their output level. The result is further generalized by two model extensions in which assumptions are relaxed to allow openness in the economy or intertemporal storage of grains with grain reserve policy. The findings of this article suggest that governments should carefully examine the actual risk-bearing pattern of crop producers before any subsidy policy is implemented.

Crop sharing scheme at drought risk in an open economy

This paper presents an open economy model qualitatively to investigate the risk sharing effect of a crop sharing system to stabilize food security under drought. Two crop sharing systems are considered in this model: “proportionally divided system” and “forward contract system.” The model reveals the possibility that the proportionally divided system is effective when high drought risks exist and high trade barriers prevent a country from importing crops, and that the forward contract system mitigates drought risk when forward contract is set at prices lower than the prices in the normal condition. Further, this study shows that the proportionally divided system can improve social welfare in the condition of high drought risks and high trade barriers, while a hold-up problem can be caused by the lack of producer incentive to invest in the production of crops.

Labor mobility, goods tradability, and efficient allocation of disaster risk

Given the role of agriculture sector in an economy and its vulnerability in terms of disasters, direct monetary transfers are paid from tax-payers to agriculture producers in many countries. Government policies are expected not only to provide higher and more stable income to producers but also to create incentives to attract rural households to continue farming. Nevertheless, these policies have been doubted for inducing economic inefficiency because the later piece of effect masks the market signal for resources and risk allocation. This research uses a dual-economy model with inter-sectoral flow of labor and commodity to justify government policies that discourages rural producers to work in urban sectors. The result of the model shows that when there is no disaster insurance market, migration behavior should be controlled and fiscal transfer do improve economic efficiency. When there is disaster insurance market in this economy, market mechanism can achieve social optimal allocation if goods tradability is perfect. When goods tradability is imperfect, migration behavior in the insurance equilibrium should be controlled if the migration costs is low, or vice versa. Government intervention is necessary to encourage or discourage migration in each case, respectively.

Combined international and intergenerational disaster risk diversification: An innovative instrument for government intervention into the private disaster insurance program

Major catastrophic experiences since the 1990s and the rise in both frequency and severity of natural hazards have resulted in widespread concern about the financial management of disaster risk. Alternative risk transfer approaches have been designed to support the insurance industry in capping and insurability issues, among which capital markets as well as governments are expected to contribute. In this paper, the authors discuss the role of the government in supporting the market-based disaster risk financing approach. This is done using a one-good, two-country and two-period-overlapping-generation model. Agents living in the less developed and less damage resistant country can transfer their risk via the international private insurance market to the foreign agents. Disaster risk could also be diversified among generations through the intergenerational system operated by their government. The intergenerational framework uses the buffer stock strategy consisting of a disaster reserve and international loans. With the capital accumulated in the reserve, the government should intervene into the private international insurance market so that an optimum combination of the private and public sectors are reached. Numerical results show that through intervention Pareto improvement is achieved in terms of social welfare. Theoretically, the intervention could be conducted either in the form of public insurance or a government-sponsored private insurance program.

The economic benefits of irreversible risk reduction by disaster prevention investment

Once serious disaster occurs, many victims may simultaneously lose their lives. One is always under disaster risks and is never free from them throughout ones life. Among others, this study exclusively focuses upon two distinct features of fatal risks by disaster: backgroundness and irreversibility. The disaster prevention investment is the basic means to reduce the fatal risks that people may be killed in disaster. In the paper, a dynamic optimal consumption model with disaster risks is formulated to analyze how the consumers demands for composite goods and life insurance are modified by reduction of the fatal risks. The economic benefits of disaster prevention investment can be measured by investigating how the present value of the stream of utility that the representative consumer can derive from his/her life-long consumption plan, is influenced by change in the fatal risks.

Dynamic Stochastic Macroeconomic Model of Disaster Risk Reduction Investment in Developing Countries: Dynamic Stochastic Macroeconomic Model of DRR Investment in Developing Countries

This research formulates a dynamic stochastic macroeconomic model that includes an optimization problem for the formation of stock of human capital, production capital, and household assets, and quantitatively examines economic impacts of disaster on developing countries. We further investigate the optimal policy of development of disaster risk reduction (DRR) capital by considering costs of DRR investment, and show that the effect of DRR investment on economic growth is like a single-peaked curve with respect to the DRR investment rate, which implies that overaccumulation could decelerate economic growth. Moreover, this study emphasizes an effect that DRR capital increases the shadow values of other types of capital and assets by reducing risks of destruction. Importantly, this effect emerges even in cases of process, in which disaster does not actually occur for a long period. We decompose the effects of DRR investments into two parts: ex-ante risk reduction effect (ARRE) and ex-post damage mitigation effect (PDME). Furthermore, we develop a method of measuring ARRE and PDME by applying the results of Monte Carlo simulation, and show that the scale of ARRE is nonnegligible using a case study of Pakistan. The results imply that types of models that cannot valuate ARRE underestimate the value of DRR investment.

Exploring the Role of Trust in Risk Communication Among Climate-Induced Vulnerable Rural Communities in Wa West District, Ghana

Northern Ghana needs effective early warning system against its climate-induced vulnerabilities. Though there are a plethora of early warning information channels, the challenge often lies in identifying effective communication tool that would spur the vulnerable community into action and its mediating mechanisms. This is against the backdrop that prior studies indicate that information does not automatically lead to action without individual’s personal interpretation. Trust is thus seen as a key mediator between the sources of information and individual’s disaster response rate. Based on our field studies from Northern Ghana, we empirically explore the relationship between trust, risk perception, and the acceptance of preventive actions by comparing two models of trust: the causal chain and the associationist view. We examine whether the relationship between trust in information sources and the disaster-preventive action is mediated by the risk perception (i.e., the causal chain model) or whether the risk perception and trust in information sources are expressions of a more general attitude toward disaster preparedness (i.e., the associationist view model). Our findings challenge the conventional causal chain model and suggest that trust does not necessarily influence the acceptance of a disaster-preventing actions (e.g., evacuation). Rather, trust is more of a reflection of the individual’s general attitude toward disaster preparedness, which is shaped by his/her cultural norms.

Natural disasters and dynamics of “a paradise built in hell”: a social network approach

Solnit (In A paradise built in hell: The extraordinary communities that arise in disaster. Penguin 2010) notes that it is often the case that immediately after a disaster occurs, voluntary mutual help motivated by altruism among the victims is observed. She names this phenomenon “a paradise built in hell.” Subsequently, it has been pointed out that “a paradise built in hell” has the potential to reform existing social institutions in the long term. Through the application of a social network model based on game theory, this study models the link formation motivated by altruistic preferences during disasters and analyzes the possibilities for a long-term outcome induced by the short-term effect of “a paradise built in hell.” More specifically, we utilize numerical simulations and examine the dynamic effect of altruistic link formation during disasters on the properties of a network such as network density and disparities in the number of links of each player. In addition, this study focuses on larger-scale disasters that lead to more instances of altruistic behaviors among affected people, and analyzes such behaviors’ cross-sectional and dynamic effects on social welfare as well as the possibility of the long-term outcome of “a paradise built in hell.”

Analyzing urban rituals with reference to development of social capital for disaster resilience

Based on the field survey data of Kishiwada City, Osaka, Japan, this paper analyzes the potential role of social capital developed through ritual events in building a disaster resilient community. The preliminary findings show that the ritual events are contributing to the development of trust in the community at Kishiwada. Bonding social capital, bridging social capital and trust are found to enhance disaster awareness and self reliance. It is also found that ritual based organizations in Kishiwada are functioning as a social platform that regularly activates residents for collective actions in civic activities. Implications regarding the social utility of ritual based organizations in disasters are also discussed.