The wrath of God : macroeconomic costs of natural disasters, Vol. 1 of 1

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The wrath of God : macroeconomic costs of natural disasters

Author:	Raddatz, Claudio;	Collection Title:	Policy Research working paper ; no. WPS 5039
Country:	World;	Date Stored:	2009/11/05
Document Date:	2009/09/01	Document Type:	Policy Research Working Paper
Language:	English	Region:	The World Region
Report Number:	WPS5039	SubTopics:	Adaptation to Climate Change; Pollution Management & Control; Disaster Management; Hazard Risk Management; Natural Disasters
Volume No:	1 of 1

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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