The Wrath of God : Macroeconomic Costs of Natural Disasters
The process of global climate change has been associated with an increase in the frequency of climatic disasters. Yet, there is still little systematic evidence on the macroeconomic costs of these episodes. This paper uses panel time-series techniq...
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| Format: | Policy Research Working Paper |
| Language: | English |
| Published: |
2012
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| Online Access: | http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20091105181816 http://hdl.handle.net/10986/4307 |
| Summary: | The process of global climate change has
been associated with an increase in the frequency of
climatic disasters. Yet, there is still little systematic
evidence on the macroeconomic costs of these episodes. This
paper uses panel time-series techniques to estimate the
short and long-run impact of climatic and other disasters on
a country's GDP. The results indicate that a climate
related disaster reduces real GDP per capita by at least 0.6
percent. Therefore, the increased incidence of these
disasters during recent decades entails important
macroeconomic costs. Among climatic disasters, droughts have
the largest average impact, with cumulative losses of 1
percent of GDP per capita. Across groups of countries, small
states are more vulnerable than other countries to
windstorms, but exhibit a similar response to other types of
disasters; and low-income countries responds more strongly
to climatic disasters, mainly because of their higher
response to droughts. However, a country's level of
external debt has no relation to the output impact of any
type of disaster. The evidence also indicates that,
historically, aid flows have done little to attenuate the
output consequences of climatic disasters. |
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