A presentation titled,'The Real Economic Cost of Disaster and How to Build Resilience' as delivered by Dr. Justin Ram, Director, Economics Department, Caribbean Development Bank in Grenada on October 12, 2017.

1. The Real Economic
Cost of Disaster and
How to Build Resilience
Dr. Justin Ram, Director, Economics Department
Grenada
October 12, 2017

2. Development,
how will we do
it?

3. AGENDA
01 Overall Cost of Disasters
02 Impact on Tourism Economy
03 Economic Vulnerability of the Region
and how to Build Resilience
04 CDB’s Role

4. The initial
costs of
natural
disasters
have been
significant
Damages caused by storms in region
selected storms, selected economies
1989 Hugo
434%of Montserrat’s GDP
2004 Ivan
200%
of Grenada’s GDP
2017 Irma and Maria Estimates
90%
of Dominica’s
GDP
2015 Erika
• Estimates not yet available for
TCI and Dominica
• Dominica anticipated to have
lost over 100% of GDP
• TCI estimated to have 14%
building damage
20%
85%
140%
Antigua & Barbuda Anguilla BVI

5. Secondary
effects have
crippled
economies
for years
Higher public debt ratios
Decline in key industries
Larger trade deficits
Economic and Fiscal Impact of
Natural Disasters
Population migration
Total damages to
the region from
148 disasters
(1950 – 2014)
$52
billion
Source: Acevedo, 2016

6. AGENDA
01 Overall Cost of Disasters
02 Impact on Tourism Economy
03 Economic Vulnerability of the Region
and how to build resilience
04 CDB’s Role

7. $100
Tourist Spend
$35-54
Added to GDP
same year
$155-160
Long term impact
Economic
Impact
Tourism is a key
economic driver
and foreign
exchange earner
for most BMCs
11.2%*
Visitor
Expenditure
BMC GDP
2014
*Direct contribution by BMC varies widely
from 1.5% in TnT to 90.6% in TCI.
Source: CDB/Deloitte

8. Tourism
supports over
30% of the
labor force in
the most
affected
countries
British Virgin
Islands Anguilla
Antigua &
Barbuda Dominica
51% 41% 26% 35%
Tourism jobs
Share of all jobs
3,000 1,500 6,000 4,000
84% 59% 54% 32%
%GDP from
tourism in 2014
Source: CDB/Deloitte, World
Travel and Tourism Council
9,000 4,500 19,500 11,500
Total jobs
(direct and indirect)

9. Environmental
damages
threaten this
positive
economic
impact
Factors determining tourism’s economic impact
Source: CDB/Deloitte

10. Before
Irma
Codrington, Barbuda
The Caribbean
is one of the
most tourism-
dependent
regions in the
world
Most of the productive capital stock that supports the Caribbean tourism
sector exists along the coastlines and tend to be most vulnerable.
The impact of a natural disaster is felt mostly in the destruction of the
capital stock.
Source: Bueno et al, 2008
After
Irma
Before
Irma
Road Town, Tortola After
Irma
Road Town, Tortola Before
Irma
Sint Maarten Port After
Irma
Sint Maarten Port Before
Irma
Paraquita Bay, BVI After
Irma
Paraquita Bay, BVI

11. We anticipate
a slowdown in
visitor arrivals
as some ports
and hotels are
repaired and
travel plans
are rerouted
BMC Visitor Arrivals by type,
1999 – 2014 (thousands)
Although cruise visitors spend less than long stay passengers, they
have driven visitor numbers and expenditure for the past decade
Moved all Eastern
Caribbean itineraries to the
west for next few months
0
2000
4000
6000
8000
10000
12000
14000
16000
1999 2003 2007 2011 2015
Stay-over
Cruise

12. The impact of
lower visitor
numbers will
multiply
throughout
economies
Source: CTO
In 2015, BMCs had over 22.6M visitors.
If those visitors change travel plans this year due to this
tumultuous hurricane season, the region will miss out on:
1%
226,653
$137.8M
$48.2M
$213.6M
Visitors would go elsewhere
Potential expenditure would be lost
Potential 2017 GDP would not be realized
Addition to GDP would be missed over
the long term
+ Additional losses from decreased
tourism employment

13. The impact of
lower visitor
numbers
multiplies
throughout
the economy
After Hurricane Ivan:
Grenada’s tourism
revenue fell by
of pre-storm levels in the
first high season
10%
Annual GDP fell by
24%due to tourism and
agricultural losses
Source: The Economist

14. AGENDA
01 Overall Cost of Disasters
02 Impact on Tourism Economy
03 Economic Vulnerability of the Region
and how to build resilience
04 CDB’s Role

15. Weak resilience
capacities
magnify our
economic
losses from
disaster
Environmental and Economic Vulnerability
Small size
Remoteness
Lack of
diversification
Dependence on
external financing
Dependence on non-
renewable energy
Susceptibility to
natural hazards

16. Other
Regional
Challenges
Macroeconomic
Low Productivity &
Competitiveness
Poor Human
Development
Environmental
Threats
Low growth
average 1.1 % over a decade
High debt
regional average 77% of GDP
Low commodity prices and
declining reserves
Jamaica is the 67th country in the WB
Ease of Doing Business – highest BMC
Large infrastructure gaps
Weak governance
Inefficient and costly transport links
and high energy costs
High poverty (43.7%) and youth
unemployment (18-47%)
Poor education outcomes, skills
mismatch and brain drain
High crime and citizen insecurity
High annual natural disaster costs
on average ~2% of GDP
Low insurance payouts
Insufficient building codes
Poor climate change adaptation tools

17. ALTERNATIVE ECONOMIC
TRANSFORMATION STRATEGIES
TRADITIONAL PATHS TO ECONOMIC
DEVELOPMENT
Alternative
Strategies:
Inclusive Growth,
Low Debt And
Prudent Fiscal
Management
Japan
1% | 239%
Figures: Real GDP Growth Rate | Debt/GDP
U.K.
1.8% | 89%
U.S.
1.6% | 107%
Singapore
2% | 112%
Australia
2.5%| 41%
New Zealand
4.0% | 30%
Sweden
3.3%| 42%
Sources: Idris Jala, WBG, Country Reports, ECCB
Malaysia
4.2% | 56%
Jamaica
1.4% | 115.2%
Barbados
1.6% | 147.1%
Trinidad and Tobago
-5.1% | 58%
OECS Average
2.6% | 72.4%

18. Caribbean
Blueprint:
A vision
for our
economies
Macroeconomic Productivity &
Competitiveness
Fiscal rules:
• Max debt/GDP
Private sector-led growth
Private sector-funded
infrastructure projects
Sustainable
Society
Stepping back in order to jump better
CCRIF and indemnity insurance
Resiliency funds
Targeted social interventions:
• Good quality education for all
• Conditional cash transfers to
the most vulnerable
Strict building code compliance
Human
Development
Environmental
Preparedness

19. What if we
had:
01 Strong leadership commitment?
Clear mandates and
implementation plans?02
90% relentless implementation?03
06
04
05
Developed regulatory framework?
Cross Government and stakeholder
ownership and partnership?
High levels of accountability and real-
time data?
Adapted from Gold, 2017

20. Essential
Elements
for
Success
New Ways of
Working
Transformational
Leadership
Source: PEMANDU, 2017

21. Implementation
Capacity Stunts
Regional
Delivery
Delayed or ineffective project
implementation
Shared Regional and International Challenges
Weak Implementation Capacity
Insufficient training
Obsolete personnel management systems
Ineffective results accountability systems
Weak decision enforcement culture
Scarce financial resources
Elaborate and promising development
plans

22. Setting up a
DU:
Best in Class
Performance
Management
Set direction and context
Establish clear accountabilities and metrics
Create realistic budgets, plans, and targets
Track performance effectively
Hold robust performance dialogue
Ensure actions, rewards, and consequences
Source: Barber et al., 2011

23. Mandate and
Responsibilities

24. AGENDA
01 Overall Cost of Disasters
02 Impact on Tourism Economy
03 Economic Vulnerability of the Region
and how to build resilience
04 CDB’s Role

25. Enhancing
productivity
and growth
Technical Assistance to support Institutional and Regulatory Reforms
Human capital base strengthening by leveraging
technology to increase access to quality education
Fostering innovation, trade and market
access
ICT infrastructure strengthening through
PPPs
Performance management and delivery units
Public Private Partnership awareness building
and support.
How the
CDB can
assist
Championing reduced inequalities through inclusive projects

26. CDB offers a
variety of
reconstruction
and resiliency
funding
Emergency Relief Grants Immediate Response Loans
Rehabilitation and
Reconstruction Loans
USD 200K USD 750K
Up to
for damage assessments and the provision and transportation of
emergency relief supplies, water and sanitation resources,
roofing materials for emergency shelters and community buildings,
and temporary shelter for displaced persons
Immediate response
Longer-term support
for reducing countries’ vulnerability to future disaster, restoring
key economic sectors to pre-disaster levels, and other efforts
Policy-Based Loans

27. While natural
disasters capture
headlines and
national attention in
the short-term, the
work of recovery and
rebuilding is
long-term.
Sylvia Mathews
Burwell