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Keywords = equity weight certainty equivalent annual damage

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17 pages, 4258 KB  
Article
Risk Aversion, Inequality and Economic Evaluation of Flood Damages: A Case Study in Ecuador
by Vito Frontuto, Silvana Dalmazzone, Francesco Salcuni and Alessandro Pezzoli
Sustainability 2020, 12(23), 10068; https://doi.org/10.3390/su122310068 - 2 Dec 2020
Cited by 7 | Viewed by 4069
Abstract
While floods and other natural disasters affect hundreds of millions of people globally every year, a shared methodological approach on which to ground impact valuations is still missing. Standard Cost-Benefit Analyses typically evaluate damages by summing individuals’ monetary equivalents, without taking into account [...] Read more.
While floods and other natural disasters affect hundreds of millions of people globally every year, a shared methodological approach on which to ground impact valuations is still missing. Standard Cost-Benefit Analyses typically evaluate damages by summing individuals’ monetary equivalents, without taking into account income distribution and risk aversion. We propose an empirical application of alternative valuation approaches developed in recent literature, including equity weights and risk premium multipliers, to a case study in Ecuador. The results show that accounting for inequality may substantially alter the conclusions of a standard vulnerability approach, with important consequences for policy choices pertaining damage compensation and prioritization of intervention areas. Full article
(This article belongs to the Special Issue Risk-Informed Sustainable Development in the Rural Tropics)
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