Valuing Human Impact of Natural Disasters: A Review of Methods

Abstract

This paper provides a comprehensive set of methodologies that have been used in the literature to give a monetary value to the human impact in a natural disaster setting. Four databases were searched for relevant published and gray literature documents with a set of inclusion and exclusion criteria. Twenty-seven studies that quantified the value of a statistical life in a disaster setting or discussed methodologies of estimating value of life were included. Analysis highlighted the complexity and variability of methods and estimations of values of statistical life. No single method to estimate the value of a statistical life is universally agreed upon, although stated preference methods seem to be the preferred approach. The value of one life varies significantly ranging from USD 143,000 to 15 million. While an overwhelming majority of studies concern high-income countries, most disaster casualties are observed in low- and middle-income countries. Data on the human impact of disasters are usually available in disasters databases. However, lost lives are not traditionally translated into monetary terms. Therefore, the full financial cost of disasters has rarely been evaluated. More research is needed to utilize the value of life estimates in order to guide policymakers in preparedness and mitigation policies.