A Climate-Economy Policy Model for Barbados

Eric Kemp-Benedict (), Crystal Drakes and Nella Canales
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Crystal Drakes: BlueGreen Initiative Inc., Peterkin Road, Bank Hall, St. Michael, Bridgetown BB11059, Barbados
Nella Canales: Stockholm Environment Institute (SEI Latinoamérica), Calle 71, #11-10, Edificio Corecol, Oficina 801, Bogotá, Colombia

Economies, 2020, vol. 8, issue 1, 1-21

Abstract: Small island developing states (SIDS), such as Barbados, must continually adapt in the face of uncertain external drivers. These include demand for exports, tourism demand, and extreme weather events. Climate change introduces further uncertainty into the external drivers. To address the challenge, we present a policy-oriented simulation model that builds upon prior work by the authors and their collaborators. Intended for policy analysis, it follows a robust decision making (RDM) philosophy of identifying policies that lead to positive outcomes across a wide range of external changes. While the model can benefit from further development, it illustrates the importance for SIDS of incorporating climate change into national planning. Even without climate change, normal variation in export and tourism demand drive divergent trajectories for the economy and external debt. With climate change, increasing storm damage adds to external debt as the loss of productive capital and need to rebuild drives imports.

Keywords: SIDS; Caribbean; climate change; climate adaptation; tropical cyclone; parametric insurance; tourism (search for similar items in EconPapers)
JEL-codes: E F I J O Q (search for similar items in EconPapers)
Date: 2020
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