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Fiscal Resilience to Natural Disasters

Lessons from Country Experiences

image of Fiscal Resilience to Natural Disasters

Natural disasters continue to cause widespread damage and losses, with fast growing economies particularly exposed. Governments often shoulder a significant share of the costs of disaster recovery and reconstruction. This is true in OECD countries and even more so in developing economies, where private insurance markets are not as well developed. The fiscal impact of disasters on a government’s budget can be sizeable. Expenditures for the government arise from both explicit and implicit commitments to compensate for disaster losses. This report presents the results of a study that compares country practices in the management of the financial implications of disasters on government finances for a set of OECD member and partner countries particularly exposed to natural hazards.

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Understanding the economic and fiscal impacts of disasters

This chapter provides an overview of the economic and fiscal impacts of large-scale catastrophic and smaller recurrent natural disasters, in particular in high- and higher-middle-income economies. It shows that the costs caused by disasters are often and to a significant extent shouldered by governments, which are asked to provide financing for both explicit and implicit commitments related to disaster response. This role for government can have important fiscal implications in governments’ budgets and can also prolong negative economic impacts if not managed adequately ex ante.

English

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