Disasters and Economic Development

an Theoretical Analysis of U-curve Phenomena

Abstract

This paper attemps to establish an economic model that explains the relationship between disasters and economic development. Historical data shows a tendency in which the economic development decreases the annual average damages of disasters in the early stage of development, but increases in the later stage. We call this tendency as U-curve phenomena and it was theoretically proven in this paper, by introducing the concept of mitigation elasticity of income. The primary conclusion is that the U-cureve phenomena implies that the strategy for disaster reduction should be asymmetric the between the early and the last stage of the development.