Quantitative Analysis on a Dynamic Inconsistency Problem with Constructing a Disaster Prevention Facility: A case study of a seawall in the city of Rikuzentakata

         
Author Name KONO Tatsuhito  (Tohoku University) /KITAMURA Naoki  (Tohoku University) /YAMASAKI Kiyoshi  (Value Management Institute, Inc.) /IWAKAMI Kazuki  (Value Management Institute, Inc.)
Creation Date/NO. June 2013 13-J-045
Research Project Development Policies for Robust Regional Economies, Learned from the Great East Japan Earthquake of 2011
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Abstract

Cost-benefit analysis (CBA) is used to optimize investment in public projects. In many countries, CBA is mandatory for the provision of most public services. However, once CBA is mandated, residents can strategically alter their behaviors based on a dynamic inconsistency in which the CBA-based optimal service level depends on residents' behaviors. This paper explores this dynamic inconsistency problem quantitatively. Taking the construction of a seawall in the city of Rikuzentakata as an example, we show the mechanism of the occurrence of a dynamic inconsistency problem and quantify the level of inefficiency compared to that of the first-best case.

The English version of this paper is 13-E-072.