Disasters and economic welfare : can national savings help explain post-disaster changes in consumption ?

The debate on whether natural disasters cause significant macroeconomic impacts and indeed hinder development is ongoing. Most analyses along these lines have focused on impacts on gross domestic product. This paper looks beyond this standard national accounting aggregate, and examines whether traditional and alternative national savings measures combined with adjustments for the destruction of capital stocks may contribute to better explaining post-disaster changes in welfare as measured by changes in consumption expenditure. The author concludes that including disaster asset losses may help to better explain variations in post-disaster consumption, albeit almost exclusively for the group of low-income countries. The observed effect is rather small and in the range of a few percent of the explained variation. For low-income countries, capital stock and changes therein, such as forced by disaster shocks, seem to play a more important role than for higher-income economies, where human capital and technological progress become crucial. There are important data constraints and uncertainties, particularly regarding the quality of disaster loss data and the shares of capital stock losses therein. Another important challenge potentially biasing the results is the lack of data on alternative savings measures for many disaster-exposed lower-income countries and small island states.Hazard Risk Management,Natural Disasters,Economic Theory&Research,,Emerging Markets

Assessing the financial vulnerability to climate-related natural hazards

National governments are key actors in managing the impacts of extreme weather events, yet many highly exposed developing countries -- faced with exhausted tax bases, high levels of indebtedness, and limited donor assistance -- have been unable to raise sufficient and timely capital to replace or repair damaged infrastructure and restore livelihoods after major disasters. Such financial vulnerability hampers development and exacerbates poverty. Based on the record of the past 30 years, this paper finds many developing countries, in particular small island states, to be highly financially vulnerable, and experiencing a resource gap (net disaster losses exceed all available financing sources) for events that occur with a probability of 2 percent or higher. This has three main implications. First, efforts to reduce risk need to be ramped-up to lessen the serious human and financial burdens. Second, contrary to the well-known Arrow-Lind theorem, there is a case for country risk aversion implying that disaster risks faced by some governments cannot be absorbed without major difficulty. Risk aversion entails the ex ante financing of losses and relief expenditure through calamity funds, regional insurance pools, or contingent credit arrangements. Third, financially vulnerable (and generally poor) countries are unlikely to be able to implement pre-disaster risk financing instruments themselves, and thus require technical and financial assistance from the donor community. The cost estimates of financial vulnerability -- based on today's climate -- inform the design of"climate insurance funds"to absorb high levels of sovereign risk and are found to be in the lower billions of dollars annually, which represents a baseline for the incremental costs arising from future climate change.Hazard Risk Management,Debt Markets,Insurance&Risk Mitigation,Banks&Banking Reform,Climate Change Economics

Multiple resilience dividends at the community level: a comparative study on disaster risk reduction interventions in different countries

The costs of disasters have been increasing in many parts of the world as a result of an increase in exposed and vulnerable assets as well as the effects of climate change. However, investments in disaster risk reduction (DRR)remain insufficient to manage these growing risks. To make investments in DRR more attractive and to shift investments from post-event response and recovery to pre-event resilience, there has been a push to account for the full range of benefits of those investments including economic, ecological and social ‘resilience dividends’. While the concept of ‘multiple resilience dividends’ is now frequently used to strengthen the DRR narrative, it has not yet been widely applied in practice when appraising DRR interventions. The paper analyses the knowledge gaps and challenges that arise from applying the ‘multiple resilience dividends’ in planning, implementation and evaluation of disaster risk reduction interventions on the community level. A newly developed framework is used to analyse empirical survey data on community level DRR interventions as well as five in-depth community case studies in Vietnam, Nepal, Indonesia, Afghanistan and the UK. The analysis reveals a disconnect between the available planning tools and the evidence on materialized multiple resilience dividends, which pose a key obstacle in successfully applying the concept on the community level. The paper concludes that a structured consideration of multiple dividends of resilience from the planning to the monitoring stage is important to secure local buy-in and to ensure that the full range of benefits can materialize

Brief communication: Sendai framework for disaster risk reduction – success or warning sign for Paris?

In March 2015, a new international blueprint for disaster risk reduction (DRR) was adopted in Sendai, Japan, at the end of the Third UN World Conference on Disaster Risk Reduction (WCDRR, 14–18 March 2015). We review and discuss the agreed commitments and targets, as well as the negotiation leading the Sendai Framework for DRR (SFDRR) and discuss briefly its implication for the later UN-led negotiations on sustainable development goals and climate change

Science for loss and damage: four research contributions to the debate

The Loss and Damage Network is a network of scientists and practitioners informing the loss and damage debate and includes members from about 20 institutions. This summary paper, written on the occasion of COP22 in Marrakesh, summarizes four recent research contributions to the debate

Social tipping points and adaptation limits in the context of systemic risk : Concepts, models and governance

Funding Information: SJ acknowledges the funding from the Finnish Academy, grant no 329239. TF is thankful to the support from the European Research Council (ERC) project #758014 under the European Union's Horizon 2020 Research and Innovation Program, and from the Netherlands Organization for Scientific Research (NWO) project #191.015. Publisher Copyright: Copyright © 2022 Juhola, Filatova, Hochrainer-Stigler, Mechler, Scheffran and Schweizer.Physical tipping points have gained a lot of attention in global and climate change research to understand the conditions for system transitions when it comes to the atmosphere and the biosphere. Social tipping points have been framed as mechanisms in socio-environmental systems, where a small change in the underlying elements or behavior of actors triggers a large non-linear response in the social system. With climate change becoming more acute, it is important to know whether and how societies can adapt. While social tipping points related to climate change have been associated with positive or negative outcomes, overstepping adaptation limits has been linked to adverse outcomes where actors' values and objectives are strongly compromised. Currently, the evidence base is limited, and most of the discussion on social tipping points in climate change adaptation and risk research is conceptual or anecdotal. This paper brings together three strands of literature - social tipping points, climate adaptation limits and systemic risks, which so far have been separate. Furthermore, we discuss methods and models used to illustrate the dynamics of social and adaptation tipping points in the context of cascading risks at different scales beyond adaptation limits. We end with suggesting that further evidence is needed to identify tipping points in social systems, which is crucial for developing appropriate governance approaches.Peer reviewe

The existential risk space of climate change

Climate change is widely recognized as a major risk to societies and natural ecosystems but the high end of the risk, i.e., where risks become existential, is poorly framed, defined, and analyzed in the scientific literature. This gap is at odds with the fundamental relevance of existential risks for humanity, and it also limits the ability of scientific communities to engage with emerging debates and narratives about the existential dimension of climate change that have recently gained considerable traction. This paper intends to address this gap by scoping and defining existential risks related to climate change. We first review the context of existential risks and climate change, drawing on research in fields on global catastrophic risks, and on key risks and the so-called Reasons for Concern in the reports of the Intergovernmental Panel on Climate Change. We also consider how existential risks are framed in the civil society climate movement as well as what can be learned in this respect from the COVID-19 crisis. To better frame existential risks in the context of climate change, we propose to define them as those risks that threaten the existence of a subject, where this subject can be an individual person, a community, or nation state or humanity. The threat to their existence is defined by two levels of severity: conditions that threaten (1) survival and (2) basic human needs. A third level, well-being, is commonly not part of the space of existential risks. Our definition covers a range of different scales, which leads us into further defining six analytical dimensions: physical and social processes involved, systems affected, magnitude, spatial scale, timing, and probability of occurrence. In conclusion, we suggest that a clearer and more precise definition and framing of existential risks of climate change such as we offer here facilitates scientific analysis as well societal and political discourse and action