THE ECONOMIC BENEFITS OF IRREVERSIBLE RISK REDUCTION BY DISASTER PREVENTION INVESTMENT

Abstract

If disaster occurs and once dead, one never recovers his/her states alive any longer. One always has to be with disaster risks and never be free from them throughout one's life. In this paper, a dynamic model is formulated to investigate the life-long consumption and the demand for insurance. Then, we propose economic valuation methods of the benefits of investment for disaster prevention.