Challenges and Opportunities for Economic Evaluation of Disaster Risk Decisions.

Abstract

Decision-makers today must assess how to manage disaster risk in increasingly complex and uncertain environments. Disaster risk management typically involves significant investment to reduce events that are unlikely to occur at any particular time (low probability) or that are highly uncertain. Under these circumstances, existing economic evaluation toolkits do not adequately support decision-making. Our paper outlines key economic evaluation tools used in decision-making and suggests a way to develop and apply these approaches in the future. We give high priority to the challenges presented by: resilience thinking, multi-capital assessment, valuing the future, accounting for distributional equity, social appetite for risk, and deep uncertainty. We recommend a strong focus on capacity and capability building to improve the risk literacy of decision-makers.