The Economics of Extreme Events: Risk, Policy, and Resilience

This Special Issue of the Italian Economic Journal, organized in collaboration with the Italian Association of Environmental and Resource Economists (IAERE), brings together a set of contributions that advance the economic analysis of natural hazards and human disasters. The papers share a common starting point: extreme events represent catastrophic risks characterized by deep uncertainty, potential threshold effects, and complex behavioural and institutional responses. The contributions collectively address three interconnected dimensions. First, they examine the structure of uncertainty and the cognitive foundations of catastrophic risk perception. Second, they analyse the design and effectiveness of mitigation, adaptation, and financial protection instruments. Third, they investigate the heterogeneous impacts of extreme events on agricultural productivity, territorial vulnerability, and social capital formation. Taken together, the findings highlight that planning horizons and information structures are not neutral in the presence of threshold uncertainty; that collective risk framing can systematically distort willingness to pay, with important implications for insurance market design; and that disaster impacts are asymmetric across outcomes and non-monotonic with respect to the frequency and timing of events. These insights contribute to a deeper understanding of catastrophic risk and provide relevant guidance for disaster risk governance and climate adaptation policy.