Challenges and opportunities for economic evaluation of disaster risk decisions
Nicola Smith, Charlotte Brown, Garry McDonald, et al. (2017)
Economics of Disasters and Climate Change, 1(1), 111-120. DOI 10.1007/s41885-017-0007-0
Decision-makers today are required to assess disaster risk management options in increasingly complex and uncertain environments. Disaster risk management typically involves significant investment to mitigate low probability or highly uncertain events. We argue that under these circumstances existing economic evaluation toolkits do not adequately support decision-making. Our paper outlines the key economic evaluation tools used in decision-making and, in turn, advances a research agenda for future development and application of these approaches. Priority challenges to be addressed include resilience thinking, multi-capital assessment, valuing the future, accounting for distributional equity, social appetite for risk, and deep uncertainty. We also recommend a strong focus on capacity and capability building to improve the risk literacy of decision-makers.