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Managing Indirect Economic Consequences of Disaster Risk: The Case of Nepal

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Integrated Catastrophe Risk Modeling

Part of the book series: Advances in Natural and Technological Hazards Research ((NTHR,volume 32))

Abstract

Natural disasters can exert significant economic and developmental impacts in countries that lack the economic resilience to bounce back post event. Yet, the brunt of these impacts often goes unrecorded and the information base for improving the financial and economic management of disaster risk in many instances is at best limited. Systematic disaster risk modeling can be a starting point for devising a comprehensive risk management approach. This chapter presents quantitative modeling analysis using the IIASA CATSIM framework for assessing economic natural disaster risk for the case of Nepal. We calculate country level direct disaster risk as well as the corresponding indirect effects using growth modeling and input-output analysis. We find the economic and fiscal risks posed by natural disasters in Nepal to be large and potentially long-lasting, particularly when they are triggered by earthquake risk. As well, disaster events ripple through the economy and may lead to important distributional effects. Given these results, we suggest there is a clear case for considering risk in economic and fiscal planning processes in Nepal and similar heavily disaster exposed countries.

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Notes

  1. 1.

    In the calculation, it is assumed that the private sector invests a certain ratio of GDP to capital if no disaster happens. If a disaster happens, the private sector does not get external funding for recovery (as it does not have access to the financial markets), so that the damaged capital cannot be restored immediately.

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Author information

Authors and Affiliations

  1. Risk, Policy and Vulnerability (RPV) Program, International Institute for Applied Systems Analysis (IIASA), Schlossplatz 1, A-2361, Laxenburg, Austria

    Reinhard Mechler & Stefan Hochrainer-Stigler

  2. Disaster Prevention Research Institute, Kyoto University, Kyoto, Japan

    Kazuyoshi Nakano

Authors
  1. Reinhard Mechler
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  2. Stefan Hochrainer-Stigler
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  3. Kazuyoshi Nakano
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Corresponding author

Correspondence to Reinhard Mechler .

Editor information

Editors and Affiliations

  1. Risk, Policy and Vulnerability (RPV) Program, International Institute for Applied Systems Analysis (IIASA), Laxenburg, Austria

    Aniello Amendola , Joanne Linnerooth-Bayer  & Reinhard Mechler ,  & 

  2. Ecosystems, Services and Management (ESM) Program, International Institute for Applied Systems Analysis (IIASA), Laxenburg, Austria

    Tatiana Ermolieva

Appendix

Appendix

1.1 SAM Multiplier Coefficients Table for Nepal Based on Acharya (2007)

 

Agriculture

Industry

Commerce

Public sector

Wage to low-skilled labor

Wage to high-skilled labor

Capital

Urban household

Large rural household

Small rural household

Landless rural household

Firms

Agriculture

1.94

0.78

0.72

0.62

1.13

1.03

0.89

1.05

0.74

1.22

1.33

0

Industry

0.43

1.50

0.42

0.41

0.58

0.54

0.47

0.53

0.43

0.67

0.60

0

Commerce

0.64

0.47

1.65

0.53

0.74

0.74

0.63

0.90

0.54

0.71

0.72

0

Public sector

0.20

0.17

0.22

1.17

0.27

0.25

0.21

0.26

0.19

0.26

0.33

0

Wage to low-skilled labor

0.74

0.44

0.54

0.56

1.54

0.51

0.44

0.54

0.37

0.57

0.62

0

Wage to high-skilled labor

0.20

0.19

0.18

0.29

0.18

1.17

0.14

0.18

0.13

0.19

0.20

0

Capital

0.96

0.75

0.96

0.52

0.77

0.73

1.63

0.80

0.54

0.81

0.84

0

Urban household

0.56

0.41

0.50

0.42

0.71

0.81

0.66

1.45

0.31

0.46

0.49

0

Large rural household

0.39

0.29

0.36

0.28

0.45

0.57

0.49

0.32

1.22

0.33

0.34

0

Small rural household

0.53

0.37

0.45

0.38

0.76

0.60

0.57

0.42

0.28

1.43

0.46

0

Landless rural household

0.29

0.20

0.24

0.22

0.47

0.33

0.27

0.23

0.16

0.24

1.25

0

Firms

0.13

0.10

0.13

0.07

0.11

0.10

0.22

0.11

0.08

0.11

0.12

1

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Mechler, R., Hochrainer-Stigler, S., Nakano, K. (2013). Managing Indirect Economic Consequences of Disaster Risk: The Case of Nepal. In: Amendola, A., Ermolieva, T., Linnerooth-Bayer, J., Mechler, R. (eds) Integrated Catastrophe Risk Modeling. Advances in Natural and Technological Hazards Research, vol 32. Springer, Dordrecht. https://doi.org/10.1007/978-94-007-2226-2_9

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