Policy Trade-Offs in Building Resilience to Natural Disasters: The Case of St. Lucia

Resilience to climate change and natural disasters hinges on financial protection and structural protection

• From: Foreign, Commonwealth & Development Office
• Published: 26 January 2021

• Country: St Lucia
• Document Type: Working Paper
• Theme: Economic Growth
• First published: 8 March 2019
• Authors: Cantelmo, A, Bonato, L, Melina, G and Salinas, G

Abstract

Resilience to climate change and natural disasters hinges on two fundamental elements: financial protection 바카라 사이트”insurance and self-insurance바카라 사이트” and structural protection 바카라 사이트”investment in adaptation. Using a dynamic general equilibrium model calibrated to the St. Lucia바카라 사이트™s economy, this paper shows that both strategies considerably reduce the output loss from natural disasters and studies the conditions under which each of the two strategies provides the best protection. While structural protection normally delivers a larger payoff because of its direct dampening effect on the cost of disasters, financial protection is superior when liquidity constraints limit the ability of the government to rebuild public capital promptly. The estimated trade-off is very sensitive to the efficiency of public investment.

This work is part of the 바카라 사이트˜Macroeconomics in Low-income countries바카라 사이트™ programme

Citation

Alessandro Cantelmo, Leo Bonato, Giovanni Melina, and Gonzalo Salinas (2019) Policy Trade-Offs in Building Resilience to Natural Disasters: The Case of St. Lucia. IMF Working Paper No. 19/54

Link

Published 26 January 2021