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Mr. Sebastian Acevedo Mejia
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.
Sebastian Acevedo and Mr. Trevor Serge Coleridge Alleyne

disasters due to storms, only 140 had information on damages (this data is complemented with other sources, see Appendix for details). Furthermore, small damages only appear in the 1990s (see Figure 2 ) suggesting that in the previous four decades disasters that caused small damages were underreported. Figure 2. Tropical Cyclone Damages in the Caribbean, 1950-2014 The total damages experienced in the Caribbean over the past 65 years amount to US$52 billion (in constant 2010 US$) for the 148 disasters with information on damages. 11 The average disaster caused

Mr. Alessandro Cantelmo, Mr. Leo Bonato, Mr. Giovanni Melina, and Mr. Gonzalo Salinas

) estimates that annual hurricane damages in the Caribbean can increase up to 77 percent by 2100 in an unmitigated climate change scenario. Under similar assumptions and time period, Acevedo and others (2018) estimate additional costs of 9 percent of GDP for a representative low-income country. 3 A small island in the Atlantic hurricane belt, St. Lucia is very vulnerable to natural disasters and climate change ( International Monetary Fund-World Bank, 2018 ). 4 Here we outlay the key features of the model, while referring the reader to the original paper for a

Mr. Sebastian Acevedo Mejia

maximum wind speed in the first period of the simulations is 220 knots per hour, which is the maximum wind speed recorded in 1996 for tropical cyclone Olivia in Australia ( Landsea, 2010 ). The maximum wind speed in 2100 reaches 253 knots per hour. 46 The damages are truncated at 600 percent of GDP throughout the simulations. The largest damages in the Caribbean were recorded in Montserrat with hurricane Hugo in 1989 (434 percent of GDP in damages). 47 Bermuda is technically not part of the Caribbean Sea; however, it shares many of the

Mr. Alessandro Cantelmo, Mr. Leo Bonato, Mr. Giovanni Melina, and Mr. Gonzalo Salinas
Resilience to climate change and natural disasters hinges on two fundamental elements: financial protection —insurance and self-insurance— and structural protection —investment in adaptation. Using a dynamic general equilibrium model calibrated to the St. Lucia’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.
International Monetary Fund. Western Hemisphere Dept.

degrees Celsius by the end of the century. Rising temperatures could exacerbate both the activity of and the damage caused by tropical cyclones. Average annual damages in the Caribbean could increase between 22 and 77 percent by 2100. 2 Disruption to marine ecosystems (including coral bleaching, seaweed invasion, and fish populations), with cost to the tourism and fisheries sectors. Precipitation General Circulation Models (GCMs) 3 predict a median decrease of up to 22 percent for annual rainfall between 2020 and 2039. 4 Changes in rainfall

International Monetary Fund. Western Hemisphere Dept.

these. 1 The common template used for all CCPAs is attached as Appendix I . Table 1. Belize: Expected Climatic Developments and Consequences Temperatures Belize is expected to be warmer by up to 2°C by the 2030s, and up to 4°C by the end of the century. 1/ Sea surface temperatures in the Caribbean are projected to go up by as much as 2 degrees Celsius by the end of the century. Rising temperatures could exacerbate both the activity of and the damage caused by tropical cyclones. Average annual damages in the Caribbean could increase

International Monetary Fund. Western Hemisphere Dept.
This paper takes stock of St. Lucia’s plans to manage climate change, from the perspective of their macroeconomic implications, and suggests macro-relevant reforms that could strengthen the likelihood of success of the national strategy. To meet its renewable energy plans, St. Lucia will need to mobilize private investment. External assistance will be needed to develop supporting infrastructure. Building capacity for project assessment and investment promotion is a high priority, to shape needed investments into bankable projects. Elsewhere, capacity-building would be most useful to help cost sectoral plans, complete the disaster-preparedness strategy, move toward carbon taxation, and strengthen skills in public investment management and public financial management.
International Monetary Fund. Western Hemisphere Dept.
Belize is exceptionally vulnerable to natural disasters and climate change. It already faces hurricanes, flooding, sea level rise, coastal erosion, coral bleaching, and droughts, with impacts likely to intensify given expected increases in weather volatility and sea temperature. Hence, planning for resilience-building, and engagement with development partners on environmental reforms, have been central to Belizean policymaking for many years, since well before Belize submitted its Nationally Determined Contribution (NDC) to the Paris Accord in 2015. This Climate Change Policy Assessment (CCPA) takes stock of Belize’s plans to manage its climate response, from the perspective of their macroeconomic and fiscal implications. The CCPA is a joint initiative by the IMF and World Bank to assist small states to understand and manage the expected economic impact of climate change, while safeguarding long-run fiscal and external sustainability. It explores the possible impact of climate change and natural disasters on the macroeconomy and the cost of Belize’s planned response. It suggests macroeconomically relevant reforms that could strengthen the likelihood of success of the national strategy and identifies policy gaps and resource needs.