A re Private Defensive Expenditures against Storm Damages A ffected by Public Programs and Natural Bar riers?

This paper combines household production with an endogenous risk framework in order to understand how ex-ante private spending by coastal households against ex-post storm-inflicted damages would evolve given the public programs and the presence of a mangrove forest. The theoretical model confirms the influence of public protection programs and the mangrove forest on private defensive expenditures based on whether the public programs serve as a possible stochastic substitute or a stochastic complement to the mangroves. The model is later applied empirically to a case study based on survey data from 35 villages comprising 500 households in the southwest coastal areas of Bangladesh affected by Cyclone Sidr in November 2007. Preliminary empirical results reveal the influence of public protective programs and the mangroves on a household’s storm protection choices. However, results also show that other controls seem to have a considerable influence and add a degree of complexity to the relationship. K ey words: Self-protection; Self-insurance; Cyclone damages; mangroves; Bangladesh JE L C lassifications: D81, Q51, Q54.