Public Programs and Remittances Influence on Private Storm-Protection Actions: Is Crowding Out Effect Most Likely Outcome?

Coastal communities in developing countries face considerable challenges regarding how to manage their response to actual and anticipated damage from major storm events. However, private defensive strategies to avert and mitigate storm-inflicted damages might be influenced by the presence of public disaster relief and rehabilitation programs and access to remittances from abroad. Given the possible nexus among these variables, we explore the dynamics of the household storm protection behavior by proposing a theoretical model. We, then, empirically tested our model based on data collected from a recently concluded household survey along the coastal areas of Bangladesh that have been frequently exposed to cyclones during 2007-2015 period. Using the household survey data, our goal is to find whether public programs for disaster relief and rehabilitation and access to inward remittances influence the economic behavior of the coastal communities by partially or fully crowding out private storm-protection actions. From policy perspectives, our theoretical and empirical findings will be particularly relevant for developing countries with poor coastal-based communities in two areas: (1) coordination between international and local or indigenous resources for emergencies and humanitarian purposes once the disaster strikes (i.e. ex-post response strategies based on humanitarian aid); and, (2) coordination with the affected economies to reserve development aid (not humanitarian aid) to enhance long-term capacity of coastal communities to reduce the likelihood of facing extensive storm-inflicted damages before a natural disaster event (i.e. ex-ante response strategies based on development aid). Our findings suggest that policies emerging from (1) and (2) can act as complements rather than substitutes to each other