Catastrophe risk models for evaluating disaster risk reduction investments in developing countries

Working Paper # 2012-07, March 2012:

This paper discusses a methodology that makes use of advanced probabilistic catastrophe models to estimate benefits of disaster risk reduction (DRR) measures, especially for low- and middle income countries, which have suffered disproportionally more economic and human losses from disasters.

Newly developed models are applied to generate estimates for hurricane risk on residential structures in the island of St. Lucia, and earthquake risk on residential structures in Istanbul, Turkey as two illustrative case studies. The costs and economic benefits for selected risk reduction measures are estimated taking account of hazard, exposure and vulnerability. The article concludes by emphasizing the advantages and challenges of catastrophe model-based cost-benefit analyses for DRR in developing countries.