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Enhancing macroeconomic resilience to natural disasters and climate change in the small states of the Pacific

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  • Ezequiel Cabezon
  • Leni Hunter
  • Patrizia Tumbarello
  • Kazuaki Washimi
  • Yiqun Wu

Abstract

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 International Monetary Fund (IMF) study assessing the impact of natural disasters on growth in the Pacific islands as a group. A panel Vector Autoregressive (VAR) analysis suggests that, for damage and losses equivalent to 1 per cent of GDP, growth drops by 0.7 percentage points in the year of the disaster. 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.

Suggested Citation

  • Ezequiel Cabezon & Leni Hunter & Patrizia Tumbarello & Kazuaki Washimi & Yiqun Wu, 2019. "Enhancing macroeconomic resilience to natural disasters and climate change in the small states of the Pacific," Asian-Pacific Economic Literature, The Crawford School, The Australian National University, vol. 33(1), pages 113-130, May.
    • Handle: RePEc:bla:apacel:v:33:y:2019:i:1:p:113-130
    DOI: 10.1111/apel.12255
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    References listed on IDEAS

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    Cited by:

    1. Mr. Alexei P Kireyev, 2018. "Macro-Fiscal Implications of Climate Change: The Case of Djibouti," IMF Working Papers 2018/233, International Monetary Fund.
    2. Noy, Ilan & Edmonds, Christopher, 2016. "The economic and fiscal burdens of disasters in the Pacific," Working Paper Series 19552, Victoria University of Wellington, School of Economics and Finance.
    3. Zhang, Yue & Wang, Wenxiong & Feng, Yanfei, 2022. "Impact of different models of rural land consolidation on rural household poverty vulnerability," Land Use Policy, Elsevier, vol. 114(C).
    4. Tauisi Taupo & Harold Cuffe & Ilan Noy, 2018. "Household vulnerability on the frontline of climate change: the Pacific atoll nation of Tuvalu," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 20(4), pages 705-739, October.
    5. Beirne, John & Renzhi, Nuobu & Volz, Ulrich, 2021. "Feeling the heat: Climate risks and the cost of sovereign borrowing," International Review of Economics & Finance, Elsevier, vol. 76(C), pages 920-936.
    6. Diagne, Youssoupha Sakrya & Thiam, Dame, 2020. "La résilience de l'économie sénégalaise : Quelles politiques publiques en réponses aux chocs exogènes? [Resillience of the senegalese economy; What policy responses to exogenous shocks?]," MPRA Paper 114018, University Library of Munich, Germany.
    7. Karim, Azreen, 2018. "The Household Response to Persistent Natural Disasters: Evidence from Bangladesh," World Development, Elsevier, vol. 103(C), pages 40-59.
    8. Catalano, Michele & Forni, Lorenzo & Pezzolla, Emilia, 2020. "Climate-change adaptation: The role of fiscal policy," Resource and Energy Economics, Elsevier, vol. 59(C).
    9. Mr. Sebastian Acevedo Mejia & Claudio Baccianti & Mr. Mico Mrkaic & Natalija Novta & Evgenia Pugacheva & Petia Topalova, 2019. "Weather Shocks and Output in Low-Income Countries: The Role of Policies and Adaptation," IMF Working Papers 2019/178, International Monetary Fund.
    10. Peter Tangney & Claire Nettle & Beverley Clarke & Joshua Newman & Cassandra Star, 2021. "Climate security in the Indo-Pacific: a systematic review of governance challenges for enhancing regional climate resilience," Climatic Change, Springer, vol. 167(3), pages 1-30, August.
    11. Taupo, Tauisi, 2017. "Sustainable financing for climate and disaster resilience in Atoll Islands: Evidence from Tuvalu and Kiribati," Working Paper Series 6633, Victoria University of Wellington, School of Economics and Finance.
    12. Taupo, Tauisi, 2017. "Sustainable financing for climate and disaster resilience in Atoll Islands: Evidence from Tuvalu and Kiribati," Working Paper Series 20269, Victoria University of Wellington, School of Economics and Finance.
    13. Karim, Azreen, 2016. "The household response to persistent natural disasters: Evidence from Bangladesh," Working Paper Series 4968, Victoria University of Wellington, School of Economics and Finance.
    14. Rezaei Soufi, Hojat & Esfahanipour, Akbar & Akbarpour Shirazi, Mohsen, 2022. "A quantitative approach for analysis of macroeconomic resilience due to socio-economic shocks," Socio-Economic Planning Sciences, Elsevier, vol. 79(C).
    15. Dongyeol Lee & Huan Zhang & Chau Nguyen, 2018. "The Economic Impact of Natural Disasters in Pacific Island Countries: Adaptation and Preparedness," IMF Working Papers 2018/108, International Monetary Fund.

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