TY  - BOOK
AU  - Ghesquiere,Francis
AU  - Ghesquiere,Francis
AU  - Mahul,Olivier
TI  - Sovereign Natural Disaster Insurance for Developing Countries: A Paradigm Shift in Catastrophe Risk Financing 
PY  - 2007///
CY  - Washington, D.C.
PB  - The World Bank
KW  - Banks and Banking Reform
KW  - Debt Markets
KW  - Developing Countries
KW  - Environment
KW  - Expenditures
KW  - Finance and Financial Sector Development
KW  - Hazard Risk Management
KW  - Insurance
KW  - Insurance and Risk Mitigation
KW  - Long-term resource
KW  - Natural Disaster
KW  - Natural Disasters
KW  - Private investors
KW  - Public investment
KW  - Risk Management
KW  - Safety Net
KW  - Tax
KW  - Urban Development
N2  - Economic theory suggests that countries should ignore uncertainty for public investment and behave as if indifferent to risk because they can pool risks to a much greater extent than private investors can. This paper discusses the general economic theory in the case of developing countries. The analysis identifies several cases where the government's risk-neutral assumption does not hold, thus making rational the use of ex ante risk financing instruments, including sovereign insurance. The paper discusses the optimal level of sovereign insurance. It argues that, because sovereign insurance is usually more expensive than post-disaster financing, it should mainly cover immediate needs, while long-term expenditures should be financed through post-disaster financing (including ex post borrowing and tax increases). In other words, sovereign insurance should not aim at financing the long-term resource gap, but only the short-term liquidity need
UR  - http://elibrary.worldbank.org/doi/book/10.1596/1813-9450-4345
ER  -