DECENTRALIZED MITIGATION AND REGIONAL ALLOCATION OF DISASTER RISK

Abstract

In this paper, the efficiency of interregional risk allocation induced by decentralized disaster mitigation investment is investigated. Due to the fiscal externality which arises when people can freely migrate among regions, the efficient interregional allocation of disaster risk cannot be attained. The paper shows that the interregional income transfer system should be introduced together with decentaralized mitigation in order to improve the efficiency of risk allocation.