Dependencies Among Extremes: the Use of Copulas for Risk Management
Stefan HOCHRAINER-STIGLER (Austria)

Examining the Nexus between Disaster Risk Management and Climate Change Adaptation: Evidence from Caribbean Coastal Tourism
Roché R.T. MAHON (Trinidad and Tobago)

Linking Disaster Risk Reduction to Sustainable Development
Kenichi TSUKAHARA (Japan)

Framework of Disaster Risk Reduction Investment Accounts for Development and its Application to Pakistan
Muneta YOKOMATSU (Japan)

Dependencies Among Extremes: the Use of Copulas for Risk Management

Stefan HOCHRAINER-STIGLER
International Institute for Applied Systems Analysis (IIASA), Austria

Assessing and managing extreme risk have to be carried out differently compared with frequent event risk. Especially dependencies among risks are important to be incorporated here. Additionally, dynamics that may alter risk in the future are important to be included in modelling approaches so that strategies to reduce risk are sustainable in the long run. We lay out an approach how to model dependencies with the use of copulas, and how to manage and prevent increases in risk because of dynamic changes over time or the correlation of losses for large scale events over regions. The uniqueness of this approach is that losses over different scales can be compared and the underestimation of extremes can be avoided. The approach may be particularly useful if dissimilar changes in risk at different scales can be expected. We test our approach in various settings, including local considerations within the Tisza river in Hungary, the European Solidarity Fund for Europe, as well as on a possible global climate fund focusing on public sector losses.

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Examining the Nexus between Disaster Risk Management and Climate Change Adaptation: Evidence from Caribbean Coastal Tourism

Roché MAHON¹, Hamish RENNIE¹ and Gary STEEL²

1. Department of Environmental Management, Faculty of Environment, Society and Design, Lincoln University, PO Box 84, Lincoln 7647, Christchurch, New Zealand
2. Department of Social Sciences, Parks, Recreation, Tourism, and Sports, P. O. Box 84, Lincoln University, Lincoln 7647, Canterbury, New Zealand

Relative to its economic size, the Caribbean remains the most tourism dependent region in the world (WTTC, 2013). The Caribbean is also one of the world’s most hazard prone and vulnerable regions (Briguglio, 1995, 2003; UNISDR, 2013). Central to the vulnerability of Caribbean destinations is the issue of their high dependency on a risk intensive model of international coastal and marine tourism, which is often characterised by a large concentration of tourists, employees and assets on the hazardous coast where they are exposed and vulnerable to disasters and the effects of climate change (Collymore, 2006; Jackson, 2004; Pelling & Uitto, 2001; UNISDR, 2013). To date, few studies have undertaken a systematic assessment of public and private sector experience in disaster risk management (DRM) practice for climate change adaptation (CCA) in the Caribbean Small Island Developing State context. More specifically, no studies are available that clearly question and then examine the link between near-term risk management decisions and adjustments and future adaptation in the region’s mainstay tourism sector. This research applies a novel conceptualisation of the Destination Choice Set Approach (Um and Crompton, 1992) to examine the scope, prevalence and categorisation of tourism supplier DRM and CCA decision-making. Analysis of interview data from 27 coastal hoteliers and tourism policy-makers in three English-speaking Caribbean destinations revealed that:

1. DRM and CCA measures overlap;
2. The CCA awareness set is smaller and more segmented than the DRM awareness set;
3. Completely new CCA measures are limited; and
4. Whilst there is collaboration and co-production of DRM adjustments, there are divergent views on the form that CCA should take.

Implications of the size, composition and structure of suppliers’ DRM and CCA choice sets for a sustainable and resilient future are discussed. This type of information can serve as input to the policy-making process and provide critical decision support for managing the risks of disasters to advance climate change adaptation in a key productive sector in Caribbean Small Island Developing States.

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Linking Disaster Risk Reduction to Sustainable Development

Kenichi TSUKAHARA¹ and Muneta YOKOMATSU²

1. Department of Civil Engineering, Kyushu University, Kyushu, Japan
2. Disaster Prevention Research Institute, Kyoto University, Kyoto, Japan

The Japanese IRDR National Committee (IRDR Japan) is currently preparing a proposal for new a discipline of science titled “total design against natural disaster for sustainable human development.” It consists of four components: multi-hazard risk, disaster and economic growth, disaster and recognition process, and total design of resilient society. The disaster and economic growth component aims to establish a multi-disciplinary approach on linking disaster risk reduction (DRR) to sustainable development.

While losses and damages by natural disasters have negatively impacted on poverty alleviation and human development that undermine the achievement of the Millennium Development Goals (MDGs), disaster issues were not included in the MDG targets. The Report of the High-Level Panel of Eminent Persons on the Post-2015 Development Agenda was released in May 2013. The report proposed to include natural disaster issues as a part of universal goals and national targets. To properly set up targets and prepare monitoring measures in disaster related matters, quantitatively measurable indicators of impacts on disaster risk reduction to economic growth and poverty alleviation should be prepared.

IRDR Japan proposes to establish a multi-disciplinary approach on Linking Disaster Risk Reduction to Sustainable Development that would be used as measures to evaluate and monitor impacts of disaster reduction efforts on fostering national economic growth and diminishing income inequality. IRDR Japan consists of not only academia but also practitioners such as government sectors, NGOs, international development agencies, and so on. By utilising this wide range of participation, IRDR Japan would produce practical models and indicators that can be used for policy-makers, practitioners, and citizens. As a front-running activity, the Japan International Cooperation Agency (JICA), in conjunction with academia and research organisations, has developed a Dynamic Stochastic General Equilibrium model to simulate impacts on economic growth and the Gini coefficient in consequence of DRR investment. Including this JICA activity, IRDR Japan would conduct scientific researches that explain co-relations between DRR efforts and national/regional economic growth and income inequality.

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Framework of Disaster Risk Reduction Investment Accounts for Development and its Application to Pakistan

Muneta YOKOMATSU¹, Katsumi WAKIGAWA², Hiroyuki WADA³, Kimio TAKEYA⁴, Tetsuya OKAYASU², Masato OKABE², Hiroyuki TAKAMATSU³, Hiroaki ISHIWATA³, Takeshi KOUNO³, Toshihiro SONODA², Yusuke AMANO⁴, Noriaki NAGATOMO⁴ and Junko MIMAKI⁴

1. Disaster Prevention Research Institute, Kyoto University, Kyoto, Japan
2. Japan Institute of Country-ology and Engineering, Tokyo, Japan
3. Pacific Consultants Co., Ltd., Tokyo, Japan
4. Japan International Cooperation Agency, Tokyo, Japan

It is recognised that investment in disaster risk reduction has definitely contributed to sustainable economic growth and poverty reduction, but it is not well described how the investment in disaster risk reduction mitigates negative impacts on national economy. Therefore, the Japan International Cooperation Agency (JICA) intends to provide an economic evaluation of disaster prevention planning from long-term macro-economic points of view and, for this purpose, the DR2AD model has been developed.

The DR2AD model is the dynamic stochastic macroeconomic model of income distribution and growth, which describes both process of preparation for future disaster and recovery from past disaster events, and identifies the value of disaster prevention investment by multiple indices such as increment of economic growth rates and decrease in the Gini coefficient. The impacts of disaster depend on development stages of society, and also vary among income classes. The model describes disaster-triggered poverty trap, both at the society and individual levels. People in developing countries can suffer from disaster-triggered poverty trap after being thrown into an economic environment where individuals have to curtail their education time for working hard to secure livelihoods, which decreases human capital and increases disaster vulnerability. Disaster intrinsically brings more severe damage to lower income people and less developed societies and, therefore, it turns out that disaster prevention infrastructure is more beneficial for them.

We apply the model to the economy of Pakistan. We exclusively focus on the role of human capital that increases GDP and its formation process. The simulation shows that a function of human capital investment as well as the values of its parameters, namely the cost and the effect of education, has a large impact on the dynamics of macro-economy. In the presentation, the way how human capital investment function is identified with data is introduced and, finally, the expected growth of Pakistan and the benefit of disaster prevention policy are described.

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