Financing the Reconstruction of Public Capital after a Natural Disaster
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-inco...
| Main Authors: | , |
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| Format: | Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2016
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2016/06/26510507/financing-reconstruction-public-capital-after-natural-disaster http://hdl.handle.net/10986/24635 |
| Summary: | 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. |
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