Who Pays? Cost-Sharing for Disaster Management in the US and Japan

Whether national and local governments should as-sume larger financial responsibility for reducing dis-aster risk remains a controversial issue. Local govern-ments lack resources to cover the full cost of managing mega-disasters and need assistance from higher level governments. However, national governments cover-ing all costs may create moral hazards, discouraging local governments from investing in ex-ante measures. This study identifies national and local governments' fiscal responsibility determinants for disaster manage-ment. Despite the differences between the federal sys-tem in the US and the centralized system in Japan, the two countries' national governments share common practices. Both have continuously developed legisla-tion to expand their financial responsibilities for re-lief and recovery efforts as disaster consequences have increased. We argue that despite major institutional differences in Japan's unitary and the US federal gov-ernment systems, both have expanded the areas cov-ered by national assistance along with the amount over time. These findings bring with them recommenda-tions for governments in an era of increasing extreme weather events due to climate change.