Potential for Application of a Probabilistic Catastrophe Risk Modelling Framework to Poverty Outcomes : General Form Vulnerability Functions Relating Household Poverty Outcomes to Hazard Intensity in Ethiopia
This paper analyzes the potential to combine catastrophe risk modelling (CAT risk modeling) with economic analysis of vulnerability to poverty using the example of drought hazard impacts on the welfare of rural households in Ethiopia. The aim is to...
| Main Authors: | , |
|---|---|
| Format: | Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2016
|
| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2016/06/26510000/potential-application-probabilistic-catastrophe-risk-modelling-framework-poverty-outcomes-general-form-vulnerability-functions-relating-household-poverty-outcomes-hazard-intensity-ethiopia http://hdl.handle.net/10986/24634 |
| Summary: | This paper analyzes the potential to
combine catastrophe risk modelling (CAT risk modeling) with
economic analysis of vulnerability to poverty using the
example of drought hazard impacts on the welfare of rural
households in Ethiopia. The aim is to determine the
potential for applying a derived set of damage
(vulnerability) functions based on realized shocks and
household expenditure/consumption outcomes, onto a
forward-looking view of drought risk. The paper outlines the
CAT risk modeling framework and the role of the
vulnerability module, which describes the response of an
affected exposure to a given hazard intensity. The need to
explicitly account for different household characteristics
that determine vulnerability within our model is considered,
analogous to how a CAT risk model would differentiate damage
functions for buildings by different classes of
construction. Results for a regression model are presented,
estimating ex-post drought impacts on consumption for
heterogeneous household types (e.g. with cattle, safety-net
access, illness). Next, the validity/generalizability of the
derived functions are assessed, to infer applicability of
the derived relationships within a CAT risk modelling
framework. In particular, the analysis focuses on external
validity: whether the relationships established in the
dataset can be used for forecasting outside of the sample
used for analysis. The model is stress-tested using
statistical methods of resampling. This involves randomly
splitting the data into “training” and "testing"
datasets. The tests show consistency of results across the
datasets. Finally, future plans are outlined with regard to
developing a fuller catastrophe risk model to combine with
the consumption results. |
|---|