Enhancing Macroeconomic Resilience to Natural Disasters and Climate Change in the Small States of the Pacific

By Ezequiel Cabezon, Leni Hunter, Patrizia Tumbarello, Kazuaki Washimi, Yiqun Wu

June 19, 2015

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Ezequiel Cabezon, Leni Hunter, Patrizia Tumbarello, Kazuaki Washimi, and Yiqun Wu. Enhancing Macroeconomic Resilience to Natural Disasters and Climate Change in the Small States of the Pacific, (USA: International Monetary Fund, 2015) accessed November 15, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

Natural disasters and climate change are interrelated macro-critical issues affecting all Pacific small states to varying degrees. In addition to their devastating human costs, these events damage growth prospects and worsen countries’ fiscal positions. This is the first cross-country IMF study assessing the impact of natural disasters on growth in the Pacific islands as a group. A panel VAR analysis suggests that, for damage and losses equivalent to 1 percent of GDP, growth drops by 0.7 percentage point in the year of the disaster. We also find that, during 1980-2014, trend growth was 0.7 percentage point lower than it would have been without natural disasters. The paper also discusses a multi-pillar framework to enhance resilience to natural disasters at the national, regional, and multilateral levels and the importance of enhancing countries’ risk-management capacities. It highlights how this approach can provide a more strategic and less ad hoc framework for strengthening both ex ante and ex post resilience and what role the IMF can play.

Subject: Climate change, Disaster aid, Environment, Fiscal policy, Fiscal stance, Foreign aid, Natural disasters

Keywords: Climate change, Disaster aid, Disaster risk management, Financial support, Fiscal stance, Global, IMF analysis, IMF policy advice, IMF staff calculation, IMF staff estimate, Natural disasters, Pacific islands, Pacific Islands, Panel VAR, Small states, WP

Publication Details

Pages:

37
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2015/125
Stock No:

WPIEA2015125
ISBN:

9781513525792
ISSN:

1018-5941

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