Paper

Financing Recovery and Reconstruction Project after Natural Disaster: Risk Sharing by Mutual Insurance


Authors:
Naoki Sakamoto; Yasuhisa Hayashiyama
Abstract
On March 11 2011, Japan was hit by “the Great East Japan Earthquake”, the strongest earthquake to strike the nation in recorded history. Recovery and reconstruction plans necessitate immense expense and time, entailing numerous arguments about the sources of revenues. As described in this paper, mutual insurance among local governments is considered as a decentralized risk sharing system. Comparative statics analysis of a simple two-regional model is conducted, demonstrating the validity of this proposal. Results show that the foundation of a mutual insurance system increases economic welfare. Therefore, to ensure enforcement of the recovery and reconstruction project, it is important to found a mutual insurance system among local governments in advance, and to build a decentralized risk sharing system.
Keywords
Natural Disaster, Risk Sharing, Financing
StartPage
35
EndPage
41
Doi
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