Climate change, trade and natural disaster/ Biswajit Chatterjee

1. CLIMATE CHANGE AND CHALLENGES FOR DEVELOPMENT I

Section I:
Evidences

Section II:
Choice of Discount Rate 11

Section III:
Implications for Development Policies 16

Section IV:
Conclusions 21



2. TRADE AND CLIMATE CHANGE 25

Section I;
International Trade and Climate Change 26

Section II;
Assessments of the Effect of Trade
Opening on Emissions 33
(a) Econometric Studies on the Scale, Composition
and Technique Effects 33
(b) The "Environmental Kuznets Curve" and
Greenhouse Gas Emissions 35
(c) Environmental Assessments of Trade Agreements 39
(d) Other Approaches 42

Section III:
Trade and Transport ' 42

Section IV:
Trade and Environment Negotiations under the WTO 45

Section V :
Contribution of Trade and Trade Opening i
to Mitigation and Adaptation Efforts 48
(a) Technological Spillovers from Trade 48
(b) Trade as a Means of Economic Adaptation to
Climate Change 49
(c) Possible Impact of Climate Change on Trade 52
(d) The Interplay of Rules 54

Section VI:
Concluding Observations 58

3. NATURAL DISASTER, RISK AND INSURANCE—
AN ANALYTICAL REVIEW 63^
I. Introduction:
Climate Change and Natural Disaster 6S
Natural Disaster / 66

Section I:
Forms of Natural Disaster 67
1. Important Forms of Natural Disasters 67
2. Natural Disasters—A Brief Overview 68
3. Factors Responsible for Natural Disasters 70
4. The Natural Disaster Poverty Nexus 71
5. Macroeconomic Impact of Natural Disaster 74

Section II:
Natural Disaster and Economic Growth 75
Introduction 75

Section III:
Theoretical and Empirical Models on Natural Disasters :
A Survey of Literature 82
Tlie Informational Effects of Natural Disasters 84
Informational Effects of Disasters : Empirical Evidence 86
Theoretical Effects of Disaster Expectations on Development 86
Models of the Insurance Market, Mitigation and Post-Disaster Aid 88
Behaviour and Perceptions of Property Owners in High Risk Areas 89
Interaction Among Insurance, Development, Mitigation and Post-Disaster Aid 91
Design of Financial Instruments for Capitalizing Private Insurance 92
Empirical Models of Economic Impacts of Disaster Events 94

Section IV:
Natural Catastrophe.Modeling 96
Catastrophe Modeling Post-Hurricane Katrina 97
Assessment of Extreme Losses from Natural Disasters :The AIR Approach 98
Natural Disaster Loss Estimation Methodology 99
Event Generation and Local Intensity 100
Vulnerability/Damage Estimation . 103

Section V:
Insurance Against Natural Disaster ' 104
The U.S. Scenario 104
Catastrophe Deductibles 105 ^
Earthquakes 106
Earthquake Insurance 106
Wildland Fires 107
Reinsurance 108 ,
Pricing 108
Special Catastrophe Programmes 109
Flood Insurance 109
Effect of Natural Disaster on Insurance Market 111
Insurance Market Consequences of Catastrophes:
Loss Ratios, Premiums and Losses 112
The Dependent Variables 114
Natural Disaster Management: The Indian Scenario 119

Section VI:
Managing the Impact of Natural Disaster—The Important Issues 121
(a) Preventive Measures 121
(b) Fiscal Preparation for Natural Disaster 122
(c) Real Time Post-disaster Response 124
Strategies for Risk Bearing, Mitigation and Risk Transfer 128
Protection Against Catastrophic Losses :
Behaviour of the Firm 128
Importance of Safety—First Constraints and
Shareholder Concerns 128
Developing Risk Management Strategies to Satisfy
Conflicting Objectives 129
Strategies for Reducing Insurer Losses 131
Underwriting and Mitigation Strategies 131
Risk Transfer Mechanisms 132
Indemnity Contracts • 132
Index-Based or Parameterized Contracts 132
Homeowners' Decision Processes and Strategies 134
Tools of Disaster Management 136
Natural Disaster Risk-Sharing: Implications for the
Developing World 138