Research progress of disaster economics

In 1990s, the research content of natural disaster economics gradually deepened. The impact of disasters on the economy no longer stays on direct economic losses, but on the regional impact of disaster risk losses through interaction. The strategies for preventing risks are gradually diversified. In addition to the traditional personal protection measures such as purchasing disaster insurance, the innovative development of financial instruments provides a new idea for disaster management. The research method has got unprecedented innovation, and many scholars began to apply econometric analysis methods to the economics of natural disasters. Carol Taylor West and David Lenze (1994) proved that the standard economic model must be revised when dealing with disasters, so they provided an econometric method for disaster loss estimation.

(a) the impact of disasters on the regional economy

Disasters have the law of regional combination, which not only affects the development of regional economy, but also belongs to the organic part of regional economic and social development. In the literature of regional impact analysis, most of them are mainly input-output models. For example, the research of Rose, Ben Avides, Chang, szczesniak and Lim( 1997) shows that the input-output model can better reflect the effectiveness of disaster conditions in comprehensive engineering simulation and survey data, and reasonable consideration of individual behavior and regional resilience can avoid overestimating economic losses. By constructing this linear programming model with spatial characteristics, they explained that if scarce public utility resources can be rationally allocated through market or administrative means after the earthquake to maximize public utilities, regional losses can be greatly reduced. Sungbincho, Peter Gordon, James Malone, Harry Richardson, Masanobu Shinozuka and Sthphanie Chang(200 1) expounded that the combination of infrastructure, transportation network and dual-area input-output (I-O) model can measure the disaster impact more accurately, and found that the massive redundancy of expressway system may be one of the factors to make up for its economic impact after the Southern California earthquake. In addition, Kohl (1994) used the social accounting matrix model to estimate the comprehensive impact of disasters on the production, families, governments and enterprises of the regional economy. In fact, the social accounting matrix model is the development of the input-output model.

(2) Personal protective measures

The choice of disaster insurance and financial instruments Shogren and Crocker( 199 1) define self-protection as an investment behavior that can not only reduce the possibility of potential losses, but also affect the severity of losses. Natural protection measures include necessary hand protection. For example, in earthquake-prone areas, people have special requirements for building materials. Typical economic means of personal protection measures include disaster insurance and various financial instruments, such as disaster bonds. The research on catastrophe insurance focuses on why insurance companies and reinsurers do not provide insurance for catastrophe, and how financial instruments used to supplement traditional insurance methods pay for disaster losses. Cummins, Doherty and A Lo(2002) pointed out that although it seems that the insurance industry has enough ability to provide compensation for large-scale disasters, according to the current situation of the insurance industry, it will lead to a large number of bankruptcies. For insurance companies, one way to obtain greater solvency is to buy reinsurance. Kenneth Froot (200 1) points out that the reinsurers are faced with the imperfection of financing and have strong market ability, which enables them to claim high insurance premiums beyond the actuarial basis value from catastrophe insurance. In view of this, it is more difficult to form individual disaster insurance in a poor and backward economy, and the government must play an important role in establishing a sustainable social insurance system. This insurance system includes not only famine relief when disasters come, but also emergency public employment, unemployment insurance, income subsidies and other social welfare projects. The capital market provides protection against disaster risks through disaster bonds, futures and options. Jerry Skees(2000) thinks that developing countries should design a precipitation contract when facing the challenge of food shortage caused by drought. According to the contract, if there is a lack of precipitation, local farmers will be compensated, and the compensation amount should be a function of the lack of precipitation, which can be determined by a reliable precipitation index. However, the research and practice of financial instruments for natural disasters in China is still in its infancy, and the academic discussion mainly focuses on insurance and state financial subsidies, and few people mention the introduction of financial instruments. Paul freeman (200 1) applied financial instruments to the state-owned assets of developing countries, the important role of the government in risk transfer and the government as the protector of the poor, and tested its application effect. Freeman concluded that the risk hedging tool is effective in the first two cases, but it is not optimistic in the third case, which is mainly due to adverse selection and moral hazard.

(C) the establishment of grain exchange rights system

1998 Amartya Sen, winner of the Nobel Prize in Economics, provided a new research perspective for disaster economics, and he put forward the theory of exchange rights. The occurrence of famine is closely related to the loss of exchange rights of some affected industrial groups, which can be explained by people's "right failure" The key problem of disaster reduction in Sahel region is to solve the vulnerability of food problem through public institutions and ensure everyone's right to food. This right includes not only the food distribution during the disaster, but also the long-term right arrangement realized through social insurance and employment security. Sen particularly emphasized that creating employment opportunities through state support can not only increase people's income, but also provide employees with food and labor, and encourage a country's trade and business process. Sen further pointed out that a country's proper social welfare system arrangement and the degree of democratization of its social and political system play an important role in reducing the negative impact of natural disasters. Through institutional changes, such as taxes and subsidies, people in disaster-prone areas can establish cooperation; For example, on the issue of preventing the loss of vegetation caused by overgrazing, the government's appropriate system reform can establish everyone's private right to respond positively to their own livestock ownership and negatively to others' livestock ownership, so that each herder can directly control his own livestock quantity and reduce the possibility of disasters. Barciay Jones and William Kandel( 1992), who hold the same view as Sen, reviewed the development of large-scale urbanization and the concentration of population and assets, and then revealed the vulnerability from another angle. They pointed out that some characteristics of attractive economic distribution areas are related to natural disasters. In these areas, the fear of sacrificing disaster safety for benefits caused by development pressure will increase the possibility of natural disasters in developing countries.