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Decision-making constraints on the implementation of viable disaster risk reduction projects: some perspectives from economics

Publication date:
C. Karayalcin
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This paper seeks to explain why progress has been so slow on the implementation of disaster risk reduction (DRR) projects and programmes over the last decade. It explains that failure to implement cost-effective DRR projects may result from a breakdown of of decision-making at the individual, policy analyst and policymaker levels. Focusing on economists' perspectives, the paper examines such policy failures. It reviews how standard practices of discounting the distant future induce a systematic downward bias in estimates of the net present value of projects with long planning horizons. The publication highlights the following advances that economists have made in explaining why policymakers may fail to implement projects that have been declared viable by analysts:

the vested interests hypothesis, which includes another variants such as: 

             o loss of political power - adoption of policies that increase aggregate welfare is expected to reduce                  political power of the current power holders             o increase in the number of vested interests - economies that enjoy growth tend to see the                 emergence of new successful groups over time             o vested interests for change - major policy reforms are at times initiated by vested interests                 themselves when they come into conflict with other vested interests and;              o politicians - opportunistic politicians form a vested interest group that prevents the adoption of                 policies that increase aggregate welfare.

policy adoption as a public good: Adoption and implementation of a policy from which everyone benefits for public good. Problem – Delay in adopting/implementing the socially beneficial policies may therefore arise because individual interest groups find it optimal to appropriate assets from the common pool

ex ante uncertainty about future private benefits - uncertain future private benefits, where although it is known that the adoption of a certain policy would benefit the majority, individuals or groups may be uncertain as to whether they will indeed be part of that majority, and therefore may oppose the adoption of the policy in question

better informed policymakers unable to convince the public - although policymakers may be better informed about the effects of the proposed policies, they are unable to communicate this information credibly to the electorate.

Finally, in addition to the foregoing explanations as to why policymakers may fail to implement projects, the paper adds that economists have also advanced other explanations including the asymmetry of information between policymakers and the public, limited credibility of governments, and the role of uncertainty in delaying policy implementation.