This paper reviews the significant macro-fiscal challenges posed by climate change in
Djibouti and the costs of mitigation and adaptation policies. The paper concludes that
Djibouti is susceptible to climate change and related costs are potentially large. Investing
now in adaptation and mitigation has large benefits in terms of reducing the related costs in
the future. Reforms to generate the fiscal space are therefore needed and investment for
mitigation and adaptation to climate change should be built into the long-term fiscal
projections. Finally, concerted international efforts and stepping up regional cooperation
could help moderate climate-related macro-fiscal risks.
This paper takes stock of Seychelles’ plans to manage climate change, from the perspective of its macroeconomic implications. It suggests macro-relevant reforms that could strengthen the plans’ likelihood of success. It highlights high public awareness and a body of existing sustainable development planning, which puts Seychelles several steps ahead toward preparedness. Next steps would be to ensure that climate change planning is integrated with the forthcoming National Development Plan. Disaster preparedness is a relatively strong point, but there is much still to be done—from improving warning systems to resilience building to contingency financing.
This paper studies the economic costs of hurricanes in the Caribbean by constructing a
novel dataset that combines a detailed record of tropical cyclones’ characteristics with
reported damages. I estimate the relation between hurricane wind speeds and damages in
the Caribbean; finding that the elasticity of damages to GDP ratio with respect to
maximum wind speeds is three in the case of landfalls. The data show that hurricane
damages are considerably underreported, particularly in the 1950s and 1960s, with
average damages potentially being three times as large as the reported average of 1.6
percent of GDP per year. I document and show that hurricanes that do not make landfall
also have considerable negative impacts on the Caribbean economies. Finally, I estimate
that the average annual hurricane damages in the Caribbean will increase between 22 and
77 percent by the year 2100, in a global warming scenario of high CO2 concentrations and
high global temperatures.