Question

Natural disasters are expected to increase over time because of climate change. This makes designing policies associated with mitigating the economic losses from natural disasters and compensating those harmed increasingly important. However, there is sometimes a trade-off between compensating those harmed from natural disasters and mitigating economic damage. Comment on how issues of asymmetric information play into this trade-off and important facts policymakers should consider when designing policies related to natural disasters.

Answer 1

In today's time climate change is one of the most serious problem which leads to many natural disasters such as floods,cyclones etc so the people adfected by such type of disasters are compensated by the government however there must be an economic loss for the government then for the policymaker it is important that he will consider both the factors before making any policy but many a time what happens is that there is a asymetry between these two as take the example of today's world where we can take the example of coronavirus a mass of people is affected by this and due to this the export,import,tourism and all the economic activities got affected as there was a worldwide lockdown but on the stake of people's life the lockdown was lifted for boost of economies so these kind of assymetries are created many a time compensation is being paid and economy also do not come as per expectations because of non implementation of proper policies. When policymakers make policy they should first consider the benefit of masses and they should have long term approach and it should align with the economy then only we can say a policymaker is good for the country.