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State capacity and vulnerability to natural disasters

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  • Richard S.J. Tol

    (Department of Economics, University of Sussex, Falmer, United Kingdom)

Abstract

Many empirical studies have shown that government quality is a key determinant of vulnerability to natural disasters. Protection against natural disasters can be a public good—flood protection, for example—or a natural monopoly—early warning systems, for instance. Recovery from natural disasters is easier when the financial system is well-developed, particularly insurance services. This requires a strong legal and regulatory environment. This paper reviews the empirical literature to find that government quality and democracy reduce vulnerability to natural disasters while corruption of public officials increases vulnerability. The paper complements the literature by including tax revenue as an explanatory variable for vulnerability to natural disasters, and by modelling both the probability of natural disaster and the damage done. Countries with a larger public sector are better at preventing extreme events from doing harm. Countries that take more of their revenue in income taxes are better at reducing harm from natural disasters.

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  • Richard S.J. Tol, 2021. "State capacity and vulnerability to natural disasters," Working Paper Series 0721, Department of Economics, University of Sussex Business School.
    • Handle: RePEc:sus:susewp:0721
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    Cited by:

    1. Valeria Terrones & Richard S.J. Tol, 2022. "Relevance of financial development and fiscal stability in dealing with disasters in Emerging Economies," Working Paper Series 0722, Department of Economics, University of Sussex Business School.
    2. Long, Mallory & Withey, Patrick & Risk, Dave & Lantz, Van & Sharma, Chinmay, 2024. "Economic impacts of reducing methane emissions in British Columbia’s oil and natural gas sectors: Taxes vs technology standards," Resource and Energy Economics, Elsevier, vol. 76(C).
    3. Niknam, Pouriya H & Sciacovelli, Adriano, 2023. "Hybrid PCM-steam thermal energy storage for industrial processes – Link between thermal phenomena and techno-economic performance through dynamic modelling," Applied Energy, Elsevier, vol. 331(C).

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    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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