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The Economic Effects of Floods

Investigations of a Stochastic Model of Rational Investment Behavior in the Face of Floods

  • Book
  • © 1972

Overview

Authors:
  1. John P. Brown

    1. Dept. of Economics, Brown University, Providence, USA

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Part of the book series: Lecture Notes in Economics and Mathematical Systems (LNE, volume 70)

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Table of contents (7 chapters)

  1. Front Matter

    Pages i-v
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  2. Introduction

    • John P. Brown
    Pages 1-4

  3. Background and Assumptions

    • John P. Brown
    Pages 5-13

  4. The Choice of the Optimal Activity

    • John P. Brown
    Pages 14-23

  5. The Optimal Replacement Policy

    • John P. Brown
    Pages 24-30

  6. When Flood Probabilities are Unknown: The Bayesian Approach

    • John P. Brown
    Pages 31-44

  7. Flood Control and Relief Measures: An Elementary View

    • John P. Brown
    Pages 45-69

  8. Computer Simulation of Investment Behavior in a Flood Plain

    • John P. Brown
    Pages 70-81

  9. Back Matter

    Pages 82-89
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Keywords

About this book

There is by now a large literature on the economic aspects of flood control and flood relief policies. The contribution of this paper lies in its careful scrutiny of one single critical aspect of the economics of floods, the choice of land use by a single landยญ owner. We analyze that choice using the methods of dynamic programming, and in particular, we show how that choice is dependent on the probability of floods for his piece of land. The theory we have developed here has been developed in the context of floods. In fact, this work grew out of an empirical study of flood plain damages, when we found that the underlying theory was not yet developed.! In fact, we feel that the theory is of much more general interest. It is a theory of optimal investment choice under uncertainty when that uncertainty is a result of destruction or failure of the investment at a random date. This is the case in flood plains, but it is also the appropriate basic theory for understanding investment decisions in the face of earthquakes, fires, war damage, avalanches, and other kinds of disasters. These are only the more dramatic examples of situations where replacement is required at an uncertain date.

Authors and Affiliations

  • Dept. of Economics, Brown University, Providence, USA

    John P. Brown

Bibliographic Information

  • Book Title: The Economic Effects of Floods

  • Book Subtitle: Investigations of a Stochastic Model of Rational Investment Behavior in the Face of Floods

  • Authors: John P. Brown

  • Series Title: Lecture Notes in Economics and Mathematical Systems

  • DOI: https://doi.org/10.1007/978-3-642-80699-5

  • Publisher: Springer Berlin, Heidelberg

  • eBook Packages: Springer Book Archive

  • Copyright Information: Springer-Verlag Berlin ยท Heidelberg 1972

  • Softcover ISBN: 978-3-540-05925-7Published: 24 July 1972

  • eBook ISBN: 978-3-642-80699-5Published: 06 December 2012

  • Series ISSN: 0075-8442

  • Series E-ISSN: 2196-9957

  • Edition Number: 1

  • Number of Pages: VI, 90

  • Topics: Environmental Economics, Natural Hazards, Finance, general

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