Wharton Duo Propose Steps to Reduce Catastrophes' Losses

The paper by Professors Howard Kunreuther and Erwann Michel-Kerjan for Copenhagen Consensus 2012 suggests four steps, including flood walls and effective early disaster warning systems.

Two professors from the Wharton School of the University of Pennsylvania are recommending four concrete actions that they say will better shield residents of poorer countries from natural disasters, which can be especially damaging to such countries' economies. Professors Howard Kunreuther and Erwann Michel-Kerjan wrote their paper for Copenhagen Consensus 2012 and suggest four steps: retrofitting schools to withstand earthquakes, flood walls, stronger roofs for housing in countries exposed to hurricanes and cyclones, and effective early disaster warning systems.

The schools proposal for the 35 most-exposed countries would save the lives of 250,000 people during the next 40 years and would yield a net benefit/cost ratio greater than 6 in at least one location, the Solomon Islands; the ratios for Afghanistan and Myanmar would be about 5, they calculated.

Their flood walls proposal says spending $75 billion to build walls around some affected communities in 34 countries would be cost effective and would cost far less than the $5.2 trillion that would be needed to raise by 1 meter all of the houses in flood-prone areas in those countries, according to the paper. Strengthening the roofs of houses in those countries would cost $951 billion but produce benefits two to three times higher than that amount while saving 65,700 lives during the next half century.

The least expensive proposal at less than $1 billion per year is for early warning systems in developing countries; it would yield direct benefits in reduced disaster losses of between $1 billion and $5.5 billion annually, they conclude.

They report even more people will be living in high-risk areas and more assets will be concentrated in them in the near future and weather events are becoming more extreme, so steps to reduce our vulnerability to these large-scale catastrophes are needed.

Copenhagen Consensus 2012 has collected 30 economic research papers for an expert panel meeting this month in that Danish city. They will try to answer this question: If you had $75 billion for worthwhile causes, where should you start? This meeting follows 2004 and 2008 projects by the Copenhagen Consensus Center that focused on HIV/AIDS funding and food; the center's mission is to suggest solutions to the world's biggest problems.

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