34 results for Noy, Ilan, Scholarly text

  • Sri Lankan households a decade after the Indian Ocean tsunami

    De Alwis, Diana; Noy, Ilan (2016)

    Scholarly text
    Victoria University of Wellington

    We estimate the causal effect of the Indian Ocean tsunami in Sri Lanka on household income and consumption eight years after the event, using a quasi-experimental method. A strong association between area-wide tsunami disaster shock and increases in household income and consumption in the long-term emerged from our empirical investigation. Deviating from the common observation on short-term impacts, these results are suggestive of an optimistic potential for some long-lasting potentially successful recovery scenarios. Still, Sri Lanka received a very large amount of external transfers post-tsunami, much larger than is typical for disaster events and one which may not be replicable in other cases. Our findings suggest a more nuanced picture with respect to household consumption impacts. We observe a reduction of food consumption and only find an increase in non-food consumption. The increase in non-food consumption is much smaller than the observed increase in income. We also find that households in high-income regions experienced much better recovery from the disaster.

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  • Modelling New Zealand milk: From the farm to the factory

    Welsh, Melissa; Marshall, Sarah; Noy, Ilan (2016)

    Scholarly text
    Victoria University of Wellington

    Dairy products have long been an important dietary component, particularly for young children. Because of this the dairy industry is especially sensitive to contamination scares, and dairy is of particular importance to the New Zealand economy. This paper develops a Markov chain model for the early stages of the dairy supply-chain. Using the case of a major New Zealand Dairy company, simulations are run under various product-testing scenarios. Results point to the importance of where and when testing and interventions take place. Being strict about removing potentially contaminated product early on in the supply chain can reduce total losses and improve overall production output.

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  • Household vulnerability on the frontline of climate change: The Pacific atoll nation of Tuvalu

    Taupo, Tauisi; Cuffe, Harold; Noy, Ilan (2016)

    Scholarly text
    Victoria University of Wellington

    This paper investigates the vulnerability of households to climatic disasters in the low-lying atoll nation of Tuvalu. Small Island Developing States, particularly the atoll islands, are considered to be the most vulnerable to climatic change, and in particular to sea-level rise and its associated risks. We construct poverty and hardship profiles for households on the different islands of Tuvalu, and combine these with geographic and topographic information to assess the exposure differentials among different groups using spatial econometric models. Besides the observation that poor households are more vulnerable to negative shocks because they lack the resources to respond, we also find that they are also more likely to reside in highly exposed areas to disasters (closer to the coasts and at lower elevation) and have less ability to migrate (between and within the islands).

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  • Insuring disasters: A survey of the economics of insurance programs for earthquakes and droughts

    Noy, Ilan; Kusuma, Aditya; Nguyen, Cuong (2017)

    Scholarly text
    Victoria University of Wellington

    Natural disasters have adverse consequences. A combination of effective mitigation strategies and appropriate coping measures—decreasing both exposure and vulnerability—can reduce their detrimental impact. Further policies can reduce the consequent losses to the economy in the aftermath of catastrophic events. Although constituting no panacea, the evidence suggests that insurance enables improved recovery and increases resilience. Yet, insuring catastrophic risks is complex and not easily achieved. Different types of disaster insurance products are found globally, but to narrow our discussion, we focus on two types of insurance for catastrophic hazards: earthquake insurance and agricultural insurance (for floods and droughts). We survey strategies implemented by governments, the private sector and multilateral/regional organizations that aim to address several impediments to insurance adoption and also describe the available evidence about the performance of such insurance systems in the aftermath of disaster events. We conclude with some thoughts about future research directions.

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  • Insuring earthquakes: How would the Californian and Japanese insurance programs have fared down under (after the 2011 New Zealand earthquake)?

    Nguyen, Cuong; Noy, Ilan (2017)

    Scholarly text
    Victoria University of Wellington

    Earthquakes are insured only with public sector involvement in high-income countries where the risk of earthquakes is perceived to be high. The proto-typical examples of this public sector involvement are the public earthquake insurance schemes in California, Japan, and New Zealand (NZ). Each of these insurance programs is structured differently, and the purpose of this paper is to examine these differences using a concrete case-study, the sequence of earthquakes that occurred in the Christchurch, New Zealand, in 2011. This event turned out to have been the most heavily insured earthquake event in history. We examine what would have been the outcome of the earthquakes had the system of insurance in NZ been different. In particular, we focus on the public earthquake insurance programs in California (the California Earthquake Authority - CEA), and in Japan (Japanese Earthquake Reinsurance - JER). Overall, the aggregate cost to the public insurer in NZ was $NZ 11.1 billion in its response to the earthquakes. If a similar-sized disaster event had occurred in Japan and California, homeowners would have received $NZ 2.5 billion and $NZ 1.4 billion from the JER and CEA, respectively. We further describe the spatial and distributive patterns of these different scenarios.

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  • The unfortunate regressivity of public natural hazard insurance: A quantitative analysis of a New Zealand case

    Owen, Sally; Noy, Ilan (2017)

    Scholarly text
    Victoria University of Wellington

    Natural hazard insurance is almost always provided through public-private partnerships. Given the dominant role of the public sector, it is surprising that equity issues have not faced more scrutiny with respect to the design of hazard insurance. We provide a detailed quantification of the degree of regressivity of the New Zealand earthquake insurance program – a system that was designed with an egalitarian purpose. We measure this regressivity as it manifested in the half a million insurance claims that resulted from the Canterbury earthquakes of 2011. As in other cases, this can be remedied with modifications to the program’s structure.

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  • The cost of being under the weather: Droughts, floods, and health care costs in Sri Lanka

    De Alwis, Diana; Noy, Ilan (2017)

    Scholarly text
    Victoria University of Wellington

    We measure the cost of extreme weather events (droughts and floods) on health care in Sri Lanka. We find that frequently occurring local floods and droughts impose a significant risk to health when individuals are exposed directly to these hazards, and when their communities are exposed, even if they themselves are unaffected. Those impacts, and especially the indirect spillover effects to households that are not directly affected, are associated with the land-use in the affected regions and with access to sanitation and hygiene. Finally, both direct and indirect risks associated with flood and drought on health have an economic cost; our estimates suggest Sri Lanka spends 52.8 million USD per year directly on the health care costs associated with floods and droughts, divided almost equally between the public and household sectors, and 22% vs. 78% between floods and droughts, respectively. In Sri Lanka, both the frequency and the intensity of droughts and floods are likely to increase because of climatic change. Consequently, the health burden associated with these events is only likely to increase, demanding precious resources that are required elsewhere.

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  • A viable and cost-effective weather index insurance for rice in Indonesia

    Kusuma, Aditya; Noy, Ilan; Jackson, Bethanna (2017)

    Scholarly text
    Victoria University of Wellington

    The potentially adverse effects of droughts on agricultural output are obvious. Indonesian rice farmers have no financial protection from climate risk via catastrophic weather risk transfer tools. Done well, a weather index insurance (WII) program can not only provide resources that enable recovery, but can also facilitate the adoption of prevention and adaptation measures and incentivise risk reduction. Here, we quantify the applicability, viability, and likely cost of introducing a WII for droughts for rice production in Indonesia. To reduce basis risk, we construct district specific indices that are based on the estimation of Panel Geographically Weighted Regressions models. With these spatial tools, and detailed district level data on past agricultural productivity and weather conditions, we present an algorithm that generates an effective and actuarially sound WII, and measure its effectiveness in reducing income volatility for farmers. We use data on annual paddy production in 428 Indonesian districts, reported over the period 1990-2013, and climate data from 1950-2015. We use the monthly Palmer Drought Severity Index and identify district-specific trigger and exit points for the insurance plan. We quantify the impact of this hypothetical insurance product using past production data to calculate an actuarially-robust and welfare-enhancing price for this scheme.

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  • At the very edge of a storm: The impact of a distant cyclone on Atoll Islands

    Taupo, Tauisi; Noy, Ilan (2016)

    Scholarly text
    Victoria University of Wellington

    The intensity of cyclones in the Pacific is predicted to increase and sea levels are predicted to rise, so a small atoll nation like Tuvalu can serve as the ‘canary in the mine’ pointing to the new risks that are emerging because of climatic change. In Tuvalu, households are acutely vulnerable to storm surges caused by cyclones even if the cyclone itself passes very far away (in this case about a 1000km). Based on a survey we conducted in Tuvalu, we quantify the impacts of cyclone Pam (March 2015) on households, and the determinants of these impacts in terms of hazard, exposure, vulnerability and responsiveness. Lastly, we constructed hypothetical policy scenarios, and calculated the estimated loss and damage they would have been associated with – a first step in building careful assessments of the feasibility of various disaster risk reduction policies.

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  • To leave or not to leave? Climate change, exit, and voice on a Pacific Island

    Noy, Ilan (2016)

    Scholarly text
    Victoria University of Wellington

    Observers repeatedly predict that climate change will lead and is already causing massive migration with very large numbers of people forced to leave their homes in cataclysmic waves of climate refugees. Yet, most of the empirical research on the contemporary link between climate change and migration fails to find much evidence of this migration. As climate change has been progressively intensifying for decades, should we not expect these migrations to already be happening? Here, we focus on Tuvalu, a small atoll nation in the South Pacific, that in many respects can serve as the Canary-in-the-Mine for climate change research. If migration driven by climate change is not happening today, Tuvalu may explain why. One plausible reason for this lack of migration is the desire by Tuvaluans to Voice. ‘Voicing’, a concept borrowed from Hirschman’s Exit, Voice, and Loyalty, is the advocacy expressing one’s wish for change. We present evidence that the atoll nations have decided that their best policy at this point in time is to stay and Voice. If it is not unique to the Pacific atolls, this present choice to prefer Voice to Exit may explain why the evidence on climate-induced migration is so fragile. Tuvalu may be using Voice to attempt to avert dire outcomes, or to strengthen its bargaining position for the inevitable discussions about compensation. Still, the biggest risk may be that the equilibrium mix between Voice and Exit is unstable and that the transition from one strategy to the other may be abrupt—probably in response to a catastrophic natural disaster. In the long-term, sudden and unplanned displacement are always less successful, so advance planning is necessary now, including the financing of alternatives from funding through the Warsaw International Mechanism for Loss and Damage. Keynote Paper: Migration and Climate Change CESifo Workshop – Venice 2016

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  • The economic and fiscal burdens of disasters in the Pacific

    Noy, Ilan; Edmonds, Christopher (2016)

    Scholarly text
    Victoria University of Wellington

    The Pacific Islands face the highest disaster risk, in per capita terms, globally. Examples of catastrophic events in the region include the 2009 tsunami in Samoa, the 2014 floods in the Solomon Islands, and the 2015 cyclone Pam in Vanuatu. Even without these catastrophic events, countries in the Pacific are affected by frequent natural hazards of smaller magnitude. We first evaluate the three main sources quantifying risk in the region: EMDAT, Desinventar, and PCRAFI. We describe these sources and conclude they all underestimate the risk, especially for atoll nations, and because of four important trends with respect to changes in natural hazards as a consequence of climate change. These are: (1) increasing frequency of extremely hot days; (2) changing frequency and intensity of extreme rainfall events causing flash flooding or droughts; (3) increasing intensities and changing trajectories of cyclones; and (4) sea-level rise and other oceanic ecological changes. Financial protection is the one policy area where the Pacific is the most exposed—given the very large role of the public sector in the region. It is also the area where there is probably the most room for easy-to-implement improvement. We end by analysing the applicability of various financial instruments to facilitate both ex-ante and ex-post disaster risk management in the region.

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  • Poverty and natural disasters: A meta-analysis

    Karim, Azreen; Noy, Ilan (2014)

    Scholarly text
    Victoria University of Wellington

    We conduct a meta-regression analysis of the existing literature on the impacts of disasters on households, focusing on the poor and on poverty measures. We find much heterogeneity in these impacts, but several general patterns, often observed in individual case-studies, emerge. Incomes are clearly impacted adversely, with the impact observed specifically in per-capita measures (so it is not due to the mortality caused by the observed disaster). Consumption is also reduced, but to a lesser extent than incomes. Importantly, poor households appear to smooth their food consumption by reducing the consumption of non-food items; the most significant items in this category are spending on housing, health, and education. This suggests potentially long-term adverse consequences as consumption of these services is often better viewed as long-term investment. We do not find consistent patterns in long-term impacts; it appears the limits of the meta-regression methodology prevent us from observing patterns in the relatively few heterogeneous research projects that examine these long-term effects. The importance of addressing risk within the context of sustainable development and poverty alleviation is clear. The impact of disasters on the poor may be increasingly worrying considering the climate variations we anticipate.

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  • Comparing the direct human impact of natural disasters for two (surprisingly similar) cases — the Christchurch earthquake and Bangkok flood of 2011

    Noy, Ilan (2015)

    Scholarly text
    Victoria University of Wellington

    The standard way in which disaster damages are measured involves examining separately the number of fatalities, of injuries, of people otherwise affected, and the financial damage that natural disasters cause. Here, we implement a novel way to aggregate these separate measures of disaster impact and apply it to two recent catastrophic events: the Christchurch (New Zealand) earthquakes and the Greater Bangkok (Thailand) floods of 2011. This new measure, which is similar to the World Health Organization’s calculation of Disability Adjusted Life Years (DALYs) lost from the burden of diseases and injuries, is described in detail in Noy (2014). It allows us to conclude that New Zealand lost 180 thousand lifeyears as a result of the 2011 events, and Thailand lost 2,644 thousand years. In per capita terms, the loss is similar, with both countries losing about 15 days per person due to the 2011 catastrophic events in these two countries. We also compare these events to other potentially similar events.

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  • The (mis) allocation of public spending in a low income country: Evidence from disaster risk reduction spending in Bangladesh

    Karim, Azreen; Noy, Ilan (2015)

    Scholarly text
    Victoria University of Wellington

    Rational allocation of limited public resources is critical to achieve the stated aims of government programmes. Here, we focus on the regional allocation of public spending for disaster risk reduction in Bangladesh as a case study to identify the rationale that guides public funding allocations. It is well understood that any government’s public spending decision-making is also affected by considerations other than need, and our objective in this paper is to identify all of the directly observable determinants’ of publicly allocated and realized spending at the local government (sub-district) level. We employ the Heckman two-stage selection model with detailed public finance and other data from 483 sub-districts (upazilas) across the country. While some of our results conform with our priors, our estimations surprisingly find that government does not respond to the sub-district’s risk exposure as a factor affecting the DRR financing mechanism. This variable is consistently counter-intuitively negative and statistically significant. The DRR regional allocations do not seem to be determined by risk and exposure, only weakly by vulnerability, nor even by more transparent political economy motivations. This is surprising, as the Bangladesh DRR program is considered a poster-child of DRR investments.

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  • A non-monetary global measure of the direct impact of natural disasters

    Noy, Ilan (2015)

    Scholarly text
    Victoria University of Wellington

    The standard way in which disaster damages are measured involves examining separately the number of fatalities, of injuries, of people otherwise affected, and the financial damage that natural disasters cause. Here, we propose a novel way to aggregate measures of disaster impact, which aims to overcome many of the difficulties previously identified in the literature. This new index is similar, but conceptually different, from the World Health Organization’s calculation of Disability Adjusted Life Years (DALYs) lost from the burden of diseases and injuries (WHO, 2013). We convert all measures of impact into “lifeyears” units. After analyzing worldwide trends in lifeyears lost to disasters, we conclude with a very preliminary assessment of the likely impact, in lost lifeyears, of the current Ebola epidemic in the three most affected countries in West Africa.

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  • Natural disasters and climate change in the Pacific island countries: New non-monetary measurements of impacts

    Noy, Ilan (2015)

    Scholarly text
    Victoria University of Wellington

    We tabulate and measure the burden of disasters on the Pacific Island Countries (PICs) by aggregating and comparing the data found in the two global datasets on disaster impacts. We show that the most commonly used dataset greatly underestimates the burden of disasters for the Pacific islands. Next, we describe a new index that aggregates disaster impacts, calculate this index for the PICs, and then compare the burden of disasters for the island countries of the Pacific with the island countries of the Caribbean. This comparison demonstrates quite clearly that the burden of disasters is significantly more acute in the Pacific. Lastly, we discuss the evidence regarding the future impact of climatic change in the Pacific on the region’s disaster burden. The Pacific is facing a very high degree of disaster risk, and that is only predicted to increase in the future. On the other hand, the region has a small population, and given the global resources available for disaster risk reduction, it can easily be seen as the frontier where attempts to create a more sustainable and resilient future can be put to their first tests. *

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  • Precautionary strategies and household savings

    Aizenman, Joshua; Cavallo, Eduardo; Noy, Ilan (2015)

    Scholarly text
    Victoria University of Wellington

    Why do people save? A strand of the literature has emphasized the role of ‘precautionary’ motives; i.e., private agents save in order to mitigate unexpected future income shocks. An implication is that in countries faced with more macroeconomic volatility and risk, private saving should be higher. From the observable data, however, we find a negative correlation between risk and private saving in cross-country comparisons, particularly in developing countries. We provide a plausible explanation for the disconnect between precautionary-saving theory and the empirical evidence that is based on a model with a richer account for the various modes of ‘precautionary’ behavior by private agents, in cases where institutions are weaker and labor informality is prevalent. In such environments, household saving decisions are intertwined with firms’ investment decisions. As a result, the interaction between saving behavior, broadly construed, and aggregate risk and uncertainty, may be more complex than is frequently assumed.

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  • The long-run socio-economic consequences of a large disaster: The 1995 earthquake in Kobe

    du Pont IV, William; Okuyama, Yoko; Noy, Ilan; Sawada, Yasuyuki (2015)

    Scholarly text
    Victoria University of Wellington

    We quantify the ‘permanent’ socio-economic impacts of the Great Hanshin-Awaji (Kobe) earthquake in 1995 by employing a large-scale panel data set of 1,719 wards from Japan over three decades. In order to overcome a fundamental difficulty of identifying the counterfactual, i.e., the Kobe economy without the earthquake, we adopt the synthetic control method of Abadie et al. (2010). Three important empirical patterns emerge: First, the population size and especially the average income level in Kobe have been lower than the counterfactual level without the earthquake for over fifteen years, indicating a permanent negative effect of the earthquake. Such a negative impact can be found especially in the central areas which are closer to the epicenter. Second, the surrounding areas experienced some positive permanent impacts in spite of short-run negative effects of the earthquake. Third, the furthest areas in the vicinity of Kobe seem to have been insulated from the large direct and indirect impacts of the earthquake.

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  • Floods and spillovers: Households after the 2011 great flood in Thailand

    Noy, Ilan; Patel, Pooja (2014)

    Scholarly text
    Victoria University of Wellington

    In 2011, Thailand experienced its worst flooding in decades; it caused widespread damages, and a considerable loss of life. Using data from the Thai Household Socio-Economic Survey (THSES), this paper analyses its economic impacts. In the 2012 THSES, households answered a set of questions on the extent of flooding they experienced in the 12 months prior. As the same households are followed over time, the timing of the survey and its panel structure allows us to analyse household welfare before and after the flood, for both affected households and for those who were not directly flooded. We can thus measure the true impact of the disaster on income, expenditure, assets, debt and savings levels as well as labour market outcomes. We analyse flood impacts across different socio-economic groups and livelihoods, and identify spillover effects on those households that were not directly affected by the flooding.

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  • The measurement of disaster risk: An example from tropical cyclones in the Philippines

    Yonson, Rio; Gaillard, J. C.; Noy, Ilan (2016)

    Scholarly text
    Victoria University of Wellington

    What shapes people’s disaster risk exposure? Using a sub-national (provincial) panel econometric and deductive approach we answer this question by focussing on tropical cyclones, and using the Philippines as a case study for our measurement approach. We construct a new provincial level panel dataset, and use panel estimation methods to assess the influence of socioeconomic (vulnerability), geographic, demographic, topographic (exposure), and meteorological (hazard) characteristics on the resulting fatalities and affected persons from recent tropical cyclones. We find strong evidence that socioeconomic development reduces people’s vulnerability and loss of human lives. Further, good local governance is associated with fewer fatalities. Rapid and unplanned urbanization generates vulnerabilities and increases harm. Exposure, including topography, and hazard strength are likewise important determinants. However, disaster impacts on people appear to be influenced much more by vulnerability and exposure, than by the hazard itself. We quantify this difference in order to contribute to policy planning at national and sub-national scales.

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