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This paper focuses on how developing countries can change the way they prepare for disasters so they are better equipped to sustain economic growth. It discusses the importance of considering the goals of key decision makers and the need to understand the perceptions, systematics biases, and heuristics used by the relevant interested parties (the affected public, private and public sector organizations, and nongovernmental organizations) in choosing between alternatives. The paper highlights the importance of undertaking benefit-cost analysis to evaluate disaster risk reduction measures, recognizing that decision makers might not make meaningful use of this policy tool given their behavioral biases and simplified heuristics. To address these issues, the authors propose green growth strategies that involve multi-year contracts coupled with short-term incentives that have a chance of being implemented. The strategies focus on the role of multi-year micro-insurance, long-term loans, and multi-year catastrophe bonds that reflect the institutional arrangements in the developing country. The paper illustrates this proposal in the case of farmers' agricultural practices and investment decisions that reduce losses to property from catastrophic disasters such as drought.

Banks & Banking Reform --- Benefit-cost analysis --- Climate Change Economics --- Debt Markets --- Disaster reduction --- Economic growth --- Energy --- Environment --- Green growth policies --- Hazard Risk Management --- Insurance & Risk Mitigation --- Macroeconomics and Economic Growth --- Risk reduction

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There is an ongoing debate on whether disasters cause significant macroeconomic impacts and are truly a potential impediment to economic development. This paper aims to assess whether and by what mechanisms disasters have the potential to cause significant GDP impacts. The analysis first studies the counterfactual versus the observed gross domestic product. Second, the analysis assesses disaster impacts as a function of hazard, exposure of assets, and, importantly, vulnerability. In a medium-term analysis (up to 5 years after the disaster event), comparing counterfactual with observed gross domestic product, the authors find that natural disasters on average can lead to negative consequences. Although the negative effects may be small, they can become more pronounced depending mainly on the size of the shock. Furthermore, the authors test a large number of vulnerability predictors and find that greater aid and inflows of remittances reduce adverse macroeconomic consequences, and that direct losses appear most critical.

Conflict and Development --- Currencies and Exchange Rates --- Debt Markets --- Disaster --- Disaster event --- Disaster events --- Disaster Management --- Disaster reduction --- Disaster risk --- Disaster risk reduction --- Drought --- Droughts --- Earthquake --- Earthquakes --- Economic Theory and Research --- Emerging Markets --- Environment --- Finance and Financial Sector Development --- Flood --- Floods --- Hazard Risk Management --- Hurricane --- Macroeconomics and Economic Growth --- Natural disaster --- Natural disaster reduction --- Natural Disasters --- Natural disasters --- Natural hazards --- Private Sector Development --- Reconstruction --- Storm --- Storms --- Urban Development

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This paper provides a description of the macroeconomic aftermath of natural disasters. It traces the yearly response of gross domestic product growth - both aggregated and disaggregated into its agricultural and non-agricultural components - to four types of natural disasters - droughts, floods, earthquakes, and storms. The paper uses a methodological approach based on pooling the experiences of various countries over time. It consists of vector auto-regressions in the presence of endogenous variables and exogenous shocks (VARX), applied to a panel of cross-country and time-series data. The analysis finds heterogeneous effects on a variety of dimensions. First, the effects of natural disasters are stronger, for better or worse, on developing than on rich countries. Second, while the impact of some natural disasters can be beneficial when they are of moderate intensity, severe disasters never have positive effects. Third, not all natural disasters are alike in terms of the growth response they induce, and, perhaps surprisingly, some can entail benefits regarding economic growth. Thus, droughts have a negative effect on both agricultural and non-agricultural growth. In contrast, floods tend to have a positive effect on economic growth in both major sectors. Earthquakes have a negative effect on agricultural growth but a positive one on non-agricultural growth. Storms tend to have a negative effect on gross domestic product growth but the effect is short-lived and small. Future research should concentrate on exploring the mechanisms behind these heterogeneous impacts.

Avalanches --- Catastrophic events --- Conflict and Development --- Disaster --- Disaster events --- Disaster Management --- Disaster reduction --- Disaster risk --- Disaster risk reduction --- Droughts --- Earthquake --- Earthquakes --- Environment --- Famines --- Floods --- Hazard Risk Management --- Natural Disaster --- Natural Disasters --- Natural hazards --- Poverty Reduction --- Pro-Poor Growth --- Reconstruction --- Storms --- Tsunamis --- Urban Development --- Volcano --- Wind storms

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There has been a steady increase in the occurrence of natural disasters. Yet their effect on economic growth remains unclear, with some studies reporting negative, and others indicating no, or even positive effects. These seemingly contradictory findings can be reconciled by exploring the effects of natural disasters on growth separately by disaster and economic sector. This is consistent with the insights from traditional models of economic growth, where production depends on total factor productivity, the provision of intermediate outputs, and the capital-labor ratio, as well as the existence of important intersector linkages. Applying a dynamic Generalized Method of Moments panel estimator to a 1961-2005 cross-country panel, three major insights emerge. First, disasters affect economic growth - but not always negatively, and differently across disasters and economic sectors. Second, although moderate disasters can have a positive growth effect in some sectors, severe disasters do not. Third, growth in developing countries is more sensitive to natural disasters - more sectors are affected and the magnitudes are non-trivial.

Agricultural production --- Climate change --- Conflict and Development --- Disaster --- Disaster Management --- Disaster reduction --- Disaster risk --- Disaster risk reduction --- Drought --- Droughts --- Earthquake --- Earthquakes --- Environment --- Famine --- Flood --- Flooding --- Floods --- Hazard Risk Management --- Natural Disaster --- Natural Disasters --- Natural hazards --- Poverty Reduction --- Pro-Poor Growth --- Reconstruction --- Storm --- Urban Development

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This paper aims to estimate the global aggregate of disaster impacts during 1960 to 2007 using Social Accounting Matrix (SAM) methodology. The authors selected 184 major disasters in terms of the size of economic damages, based on the data available from the International Emergency Disasters and MunichRe (NatCat) databases for natural catastrophes. They estimate the losses and total impacts including the higher-order effects of these disasters using social accounting matrices constructed for this study. Although the aggregate damages based on the data amount to USD 742 billion, the aggregate losses and total impacts are estimated at USD 360 billion and USD 678 billion, respectively. The results show a growing trend of economic impacts over time in absolute value. However, once the data and estimates are normalized using global gross domestic product, the historical trend of total impacts becomes statistically insignificant. The visual observation confirms the inverted 'U' curve distribution between total impact and income level, while statistical analyses indicate negative linear relationships between them for climatological, geophysical, and especially hydrological events.

Catastrophic consequences --- Conflict and Development --- Disaster --- Disaster community --- Disaster Management --- Disaster reduction --- Disaster risk --- Disaster risk reduction --- Disasters --- Documents --- Drought --- Droughts --- Earthquake --- Earthquakes --- Economic Theory and Research --- Environment --- Floods --- Hazard Risk Management --- Hurricane --- Macroeconomics and Economic Growth --- Natural catastrophes --- Natural disaster --- Natural Disasters --- Natural hazards --- Reconstruction --- Urban Development --- Volcano