Renaturalising sovereignty 43
At stake in this insurantialised governmental rationality is the historically specific question of how developing states should prepare for disasters
and secure provisioning of vital public services in the face of uncertain and
increasingly catastrophic climate change impacts (Johnson 2021). Just as
an insurer must prepare for a variety of contingent liabilities that fluctuate
wildly from year to year, so too must the state approach its vital infrastructural and welfare services as contingent liabilities with unpredictable costs.
And just as an insurer must self-finance these commitments in a way that
avoids bankruptcy, so too must the state devise strategies for self-financing
its contingent liabilities. Development economists stress that this is particularly important for SIDS, which lack the resources and capacities to raise
ex-post funds through channels available to wealthier states, such as tax
increases, budget restructuring, or t-bill offers (Ghesquiere & Mahul 2007).
SIDS, like insurers, must instead manage the costs of contingent liabilities
without ability to generate new sources of income ex nihilo.
While the demand for developing states to prepare like an insurer has
become quite pronounced in recent years, remarkably, it was largely absent
from development economics and disaster management debates until the
late 2000s. The next section examines how this paradigm shift was driven by
development economists’ critical engagements with disaster financing and
planetary volatility.
Contextualising EARM
Since the 1970s, the prevailing rationality guiding public investments on
proactive risk reduction measures has explicitly inhibited pre-event financial
planning and investments in EARM technologies. This approach, derived
from the influential Arrow-Lind theorem (Arrow & Lind 1970), states that
governments should ‘ignore uncertainty in public investments and behave
as if they were risk-indifferent’ – or in other words, that states should avoid
investing in EARM as long as their costs exceed their expected benefits
(Cummins & Mahul 2009, p. 162). Like all institutional analysis, ArrowLind is based on a methodological individualism that assumes ‘the social’
is an emergent agglomeration of individual choice preferences rather than
an ontologically prior object of governmental thought and intervention
(Collier 2017). This means that any decisions on provisioning public goods
should reflect the sum of individual preferences. Arrow-Lind applies these
assumptions to the provision of proactive risk reduction. The theorem
asserts that, ‘there is a cost of risk-bearing that must be subtracted from
the expected return in order to compute the value of the [public] investment to the individual taxpayer’ (Arrow & Lind 1970, p. 371). However,
when the individual is placed in a large-n population of other taxpayers,
the cost of risk-bearing approaches zero, since the amount of the asset that
individual claims also approaches zero. The individual effectively becomes
risk- indifferent – and the state, as the aggregate of individual preferences,
At stake in this insurantialised governmental rationality is the historically specific question of how developing states should prepare for disasters
and secure provisioning of vital public services in the face of uncertain and
increasingly catastrophic climate change impacts (Johnson 2021). Just as
an insurer must prepare for a variety of contingent liabilities that fluctuate
wildly from year to year, so too must the state approach its vital infrastructural and welfare services as contingent liabilities with unpredictable costs.
And just as an insurer must self-finance these commitments in a way that
avoids bankruptcy, so too must the state devise strategies for self-financing
its contingent liabilities. Development economists stress that this is particularly important for SIDS, which lack the resources and capacities to raise
ex-post funds through channels available to wealthier states, such as tax
increases, budget restructuring, or t-bill offers (Ghesquiere & Mahul 2007).
SIDS, like insurers, must instead manage the costs of contingent liabilities
without ability to generate new sources of income ex nihilo.
While the demand for developing states to prepare like an insurer has
become quite pronounced in recent years, remarkably, it was largely absent
from development economics and disaster management debates until the
late 2000s. The next section examines how this paradigm shift was driven by
development economists’ critical engagements with disaster financing and
planetary volatility.
Contextualising EARM
Since the 1970s, the prevailing rationality guiding public investments on
proactive risk reduction measures has explicitly inhibited pre-event financial
planning and investments in EARM technologies. This approach, derived
from the influential Arrow-Lind theorem (Arrow & Lind 1970), states that
governments should ‘ignore uncertainty in public investments and behave
as if they were risk-indifferent’ – or in other words, that states should avoid
investing in EARM as long as their costs exceed their expected benefits
(Cummins & Mahul 2009, p. 162). Like all institutional analysis, ArrowLind is based on a methodological individualism that assumes ‘the social’
is an emergent agglomeration of individual choice preferences rather than
an ontologically prior object of governmental thought and intervention
(Collier 2017). This means that any decisions on provisioning public goods
should reflect the sum of individual preferences. Arrow-Lind applies these
assumptions to the provision of proactive risk reduction. The theorem
asserts that, ‘there is a cost of risk-bearing that must be subtracted from
the expected return in order to compute the value of the [public] investment to the individual taxpayer’ (Arrow & Lind 1970, p. 371). However,
when the individual is placed in a large-n population of other taxpayers,
the cost of risk-bearing approaches zero, since the amount of the asset that
individual claims also approaches zero. The individual effectively becomes
risk- indifferent – and the state, as the aggregate of individual preferences,