Financing the reconstruction of public capital after a natural disaster

David Bevan and Christopher Adam

No 7718, Policy Research Working Paper Series from The World Bank

Abstract: When a natural disaster destroys public capital, these direct losses are exacerbated by indirect losses arising from reduced output while reconstruction takes place. These indirect losses may be much larger, relative to the direct ones, in low-income countries, because they lack the finance for rapid reconstruction. This paper uses a dynamic general equilibrium model to examine sovereign disaster risk insurance, increased taxation, and budget reallocation as alternative financing mechanisms for countries where increased borrowing is impractical. The analysis suggests that insurance may or may not be helpful, depending on detailed circumstances, and that budget reallocation is potentially very damaging. Raised taxation, if feasible, may be an attractive option.

Keywords: Hazard Risk Management; City to City Alliances; Adaptation to Climate Change; Disaster Management; Urban Economic Development; Social Risk Management; Urban Economics; Non Governmental Organizations; Public Sector Management and Reform; Economics and Institutions; Public Sector Economics; Urban Communities; Public Finance Decentralization and Poverty Reduction; Regional Urban Development; National Urban Development Policies&Strategies (search for similar items in EconPapers)
Date: 2016-06-21
New Economics Papers: this item is included in nep-dge
References: Add references at CitEc
Citations: View citations in EconPapers (11)

Downloads: (external link)
http://documents.worldbank.org/curated/en/806341468196163691/pdf/WPS7718.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wbk:wbrwps:7718

Access Statistics for this paper

More papers in Policy Research Working Paper Series from The World Bank 1818 H Street, N.W., Washington, DC 20433. Contact information at EDIRC.
Bibliographic data for series maintained by Roula I. Yazigi ().