Natural disasters are increasingly becoming a significant aspect of our daily lives. Scientific evidence has clearly indicated that rising temperatures lead to a greater frequency and intensity of weather and climate extremes. These natural hazards have severe socioeconomic impacts, particularly on the most vulnerable economies, such as Least Developed Countries (LDCs) and Small Island Developing States (SIDS).
This troubling trend is expected to worsen as human-induced greenhouse gas emissions continue to destabilize the climate system, resulting in record-breaking surface temperatures.
In response to these challenges, various initiatives have been launched to improve monitoring and assessment of disaster risks, notably under the Sendai Framework for Disaster Risk Reduction.
Several alternative indicators have been proposed to assess the vulnerabilities of affected countries. These include the Economic and Environmental Vulnerability Index, the University of Notre Dame's Global Adaptation Initiative (ND-GAIN) Index, and the Multidimensional Vulnerability Index.
Furthermore, after extensive negotiations, the 27th Conference of the Parties (COP 27) to the United Nations Framework Convention on Climate Change (UNFCCC) agreed to establish a fund to address loss and damage associated with the adverse effects of climate change, including both extreme weather events and gradual onset phenomena.
While the improvements in disaster risk monitoring and the implementation of the loss and damage fund highlight the increasing significance of this issue in international discourse, there is a pressing need for further research on the impacts of natural disasters on macroeconomic variables.
Specifically, understanding the relationship between natural disasters and economic growth — the critical factor in a country's ability to sustainably mobilize resources for reconstruction and recovery — remains limited and complex. This need is especially evident for LDCs and SIDS, which often face significant data limitations.
Focus of this paper
This paper aims to bridge this knowledge gap by empirically examining how the unique characteristics of SIDS influence the impact of climate-related natural disasters on economic growth.
Organization of the Paper
- Sections 2 and 3 review the relevant literature and discuss methodological issues, particularly concerning the measurement of natural disasters and the specific vulnerabilities of SIDS.
- Section 4 presents the econometric specification, while Section 5 discusses the results.
- Finally, Sections 6 and 7 offer robustness checks and draw conclusions, respectively.
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