Assessing the Economic Value of Early Warning Systems

Abstract

As of today, investments into early warning systems are, to a large extent, politically motivated and “disaster-driven.” This means that investments tend to increase significantly if a disaster strikes, but are often quickly reduced in the following disaster-free years. Such investment patterns make the continuous operation, maintenance and development of the early warning infrastructure a challenging task and may lead to sub-optimal investment decisions. The paper presented here proposes an economic assessment model for the tangible economic impact of early warning systems. The model places a focus on the false alert problematic and goes beyond previous approaches by incorporating some socio-cultural factors (qualitatively estimated as of now). By doing so, it supports policymakers (but also private investors) in their investment decisions related to early warning applications.

Keywords: disaster management, early warning systems, investment decisions, assessment model

JEL Classification: H40, H59, L86