Overview

There is by now a large literature on the economic aspects of flood control and flood relief policies. The contribution of this paper lies in its careful scrutiny of one single critical aspect of the economics of floods, the choice of land use by a single land­ owner. We analyze that choice using the methods of dynamic programming, and in particular, we show how that choice is dependent on the probability of floods for his piece of land. The theory we have developed here has been developed in the context of floods. In fact, this work grew out of an empirical study of flood plain damages, when we found that the underlying theory was not yet developed.! In fact, we feel that the theory is of much more general interest. It is a theory of optimal investment choice under uncertainty when that uncertainty is a result of destruction or failure of the investment at a random date. This is the case in flood plains, but it is also the appropriate basic theory for understanding investment decisions in the face of earthquakes, fires, war damage, avalanches, and other kinds of disasters. These are only the more dramatic examples of situations where replacement is required at an uncertain date.

Full Product Details

Author:   J.P. Brown
Publisher:   Springer-Verlag Berlin and Heidelberg GmbH & Co. KG
Imprint:   Springer-Verlag Berlin and Heidelberg GmbH & Co. K
Edition:   Softcover reprint of the original 1st ed. 1972
Volume:   70
Dimensions:   Width: 17.80cm , Height: 0.50cm , Length: 25.40cm
Weight:   0.200kg
ISBN:  

9783540059257

ISBN 10:   3540059253
Pages:   90
Publication Date:   24 July 1972
Audience:   Professional and scholarly ,  Professional & Vocational
Format:   Paperback
Publisher's Status:   Active
Availability:   Out of stock  
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Table of Contents

1. Introduction.- Outline of the Study.- 2. Background and Assumptions.- The Landowner or Investor.- The Description of Available Activities.- The Choice of Replacement Date.- The Effect of Floods.- The Probability of Floods.- 3. The Choice of the Optimal Activity.- 4. The Optimal Replacement Policy.- 5. When Flood Probabilities are Unknown: The Bayesian Approach.- Incomplete Information about .- The Description of Beliefs and of Learning.- The Simple Case: Investment Contracts can only be Made After Floods.- An Intermediate Case.- The Case where Replacement is Possible at any Time.- 6. Flood Control and Relief Measures: An Elementary View.- The Definition of Flood Damage.- Dams, Levees, and Other Flood Protection Works.- Flood Insurance.- Flood Relief.- Flood Plain Zoning.- 7. Computer Simulation of Investment Behavior in a Flood Plain.- Appendix FORTRAN Computer Program.

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