Estimating Damage Costs from Natural Disasters in Korea

Miyeon Lee,Kwang Yul Kim,Jong Ho Hong

doi:10.1061/(asce)nh.1527-6996.0000259

Miyeon Lee, Kwang Yul Kim + Show 1 more

Open Access

https://doi.org/10.1061/(asce)nh.1527-6996.0000259

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Abstract

This study forecasts the future cost of direct economic damages caused by natural disasters in Korea by using panel data regression. The authors first develop a balanced panel data spanning 2001–2012 for all 16 metropolitan cities and provinces in Korea. The result shows that a 1% increase in annual precipitation and impervious surfaces increases damage costs by 4.52 and 1.74%, respectively. In addition, the financial independence of local governments is negatively correlated with damage costs. The maximum annual damage costs from natural disasters through 2060 are estimated to be US$20.9 billion, which would be 1.03% of future Korean gross domestic product (GDP). Among the regions, Gangwon-do, Jeollabuk-do, and Jeollanam-do, which have a high percentage of impervious surfaces and a low financial independence rate, are expected to be the most vulnerable to natural disasters. Their estimated maximum annual damage costs are above US$5 billion by 2060, which would exceed 7% of their gross regional domestic product (GRDP). This study is the first attempt to estimate and forecast the damage costs from natural disasters using region-specific weather data in Korea. It suggests a need for a well-designed natural disaster management plan at both the central and local government levels.

Highlights

Climate change has increased the probability of natural disasters all over the world, as demonstrated by increasingly commonplace extreme weather events
This study developed a panel regression model forecasting future damage costs from natural disasters for all 16 regions in Korea
The empirical result shows that the estimated parameters of the variables for financial independence, impervious surface area, and annual precipitation are statistically significant

Summary

Introduction

Climate change has increased the probability of natural disasters all over the world, as demonstrated by increasingly commonplace extreme weather events. Domestic literature estimating damage costs from future natural disasters is limited in the sense that it does not take into account changing trends in precipitation caused by climate change; they apply precipitation data following the same statistical patterns as the past. These observations have resulted in the inclusion of the following explanatory variables: GRDP per capita, financial independence of a local government, local government budget for disaster management, river length, impervious area, maximum daily precipitation, and annual precipitation.

Results

Conclusion