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International Recovery Platform

How Economic Growth and Rational Decisions Can Make Disaster Losses Grow Faster Than Wealth

This paper shows that rapid development in these areas—and the resulting increase in disaster losses—may be the consequence of a rational and well-informed tradeoff between lower disaster losses and higher productivity.


How Economic Growth and Rational Decisions Can Make Disaster Losses Grow Faster Than Wealth

This paper proposes an economic framework to analyze the trade-off between disaster losses and
higher capital productivity in areas at risk from natural hazards. Even though hypotheses can
always be discussed, it shows that natural disasters may become less frequent but more intense
when productivity and wealth increase. It is even possible to observe a long-term increase in
average disaster losses, even in relative terms with wealth and income.

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