Law and Policy Responses to Disaster-Induced Financial Distress

The Tsunami Victims of 3/11

This chapter is published in the book Governance, Risk and Financial Impact of Mega Disasters: Lessons from Japan.

This chapter treats disaster response policies directed at the economic recovery of private households. First, we examine problems of disaster-induced financial distress from a legal and economic perspective. We do this both qualitatively and quantitatively, and focussing on residential loans, using the victims of the 11 March 2011 tsunami as our example. Then, using doctrinal and systematic analysis, we set out the broad array of law and policy solutions tackling disaster-induced debt launched by the Japanese Government. On this basis, we assess the strengths and weaknesses of these measures in terms of their practical adequacy to prevent and mitigate financial hardship and examine them against multiple dimensions of disaster justice. We conclude with suggestions for improving financial disaster recovery by taking a prospective approach, preventing the snowballing of disaster-related losses, which we argue represents a equitable and effective way forward in allocating resources following future mega disasters.