Desert Dust Storms: Insurability and Financial Solutions
79 Pages Posted: 16 Sep 2024
Date Written: August 14, 2024
Abstract
Desert Dust Storms (DDS) constitute natural hazards around the globe, with about half originating from the Sahara desert. Starting from a commonly accepted DDS definition, we use data from rural-background (RB) air-quality monitoring stations, which are away from anthropogenic influence, to identify DDS. Focusing on a representative sample of RB stations from Southern Europe (Cyprus and Italy), we document that P M 10 concentrations exceeding the 80th percentile of the P M 10 distribution per station, correlate with a 2.5% to 5.5% increase in daily deaths across all stations. In Southeastern Europe, where DDS days are more severe, daily deaths increase by nearly 20% at the 99.5th percentile of the P M 10 distribution. Hospital admissions in Southeastern Europe also rise by about 6.5% on DDS days. We argue that the nature of DDS satisfies common insurability conditions. Hence, to mitigate costs associated with DDS exposure, we propose and price insurance and financial instruments.
Keywords: Desert Dust Storms, Air Pollution, Insurance, Weather Derivatives JEL Classification: G22
JEL Classification: G22, G23, G38, Q53, Q58
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