The Economics Of Disaster Relief - 1051 Words

The Economics of Disaster Relief Relief is one of the important methods employed immediately after a disaster. In this article, we argue that, among different kinds of activities, relief provided by the government is the most efficient and feasible way to reduce the harm brought by a disaster. We first distinguish three kinds of activities that influence the magnitude and incidence of a disaster, and then elaborate their interdependency with one another, and explain why relief made by government is of great significance. Definitions of Precaution, Relief and Recovery Three kinds of activities related to mitigate the harm brought by a disaster are precaution, relief, and recovery. They have similar goals and can be easily distinguish by†¦show more content†¦Even though it has positive effects on helping people to return their life to a normal stage, recovery, mainly provided by the government, should not be encouraged as a main method in a disaster in view of its costs and benefits. Recovery efforts have prominent impact on the investment of precaution made by victims. This influence exerts through the mediating effect of the incentives for precaution, and it easily brings a moral hazard problem for victims. Once victims expect to receive large amount of recovery, they have less incentives for precaution. As precaution is the main method taken beforehand, less efforts on precaution leave potential victims in a more vulnerable place in a disaster, later they need to be helped by a larger amount of recovery. Besides, aid through recovery is not an efficient way in a disaster because its actual cost exceeds the social optimal. This excessive part is brought by political reasons. Recovery is not only an assistant method, but also a political propaganda for politicians. In a major disaster which attracts the public attention, the benefits of recovery are easily seen by the public, therefore earn political rewards and reputation for politicians. Encouraged by the visible effects of recovery propagated by the media, as well as in the consideration of the benefits for fiscalShow MoreRelatedThe American Red Cross1647 Words   |  7 Pagesone of the largest disaster relief charities, helping over 100 million people in 2013 alone. To fully understand what the Red Cross does, the term nonprofit should be defined. According to the Merriam-Webster dictionary, nonprofit is defined as â€Å"not conducted or maintained for the purpose of making a profit† (2012). The American Red Cross’ w orks not only with disaster relief, but the company also consists of many other distinct branches. They help out not only with disaster relief but also with supportingRead MoreNatural Disasters882 Words   |  4 Pages Natural disasters in Australia Natural disasters are events that occur naturally such as earthquakes, cyclones, Storms, and floods. 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