The Inter-American Development Bank (IDB) has advised nations in the Caribbean that they can recover from the economic destruction inflicted by natural disasters if they save money and streamline their governance.
“Increasing savings means more resources for investments and a greater ability to recover from natural disasters,” said the IDB in a statement. “Most countries do eventually bounce back.”
Rebuilding in the Caribbean, including Puerto Rico, will cost nearly US$13 billion, according to the Center for Disaster Management and Risk Reduction Technology in Germany.
Unlike large countries, smaller countries will take a longer time to recover from disasters, because they cannot readily mobilize resources and resettle displaced people, the bank stated. As their economies are less diversified, improving governance and saving money are the only options for smaller countries to recoup the loss.
One example cited by the IDB was Chile’s quick recovery from the 2010 earthquake. At almost 19% of the country’s GDP, the 2010 earthquake caused Chile US$30 billion in economic damages, but its savings gave it the “fiscal space” to rebuild and get back on its feet without relying on foreign aid.
The suggestion comes as Hurricane Maria starts hammering Dominica. Many analysts, including The Economist, are suggesting that the countries in the region should adapt to climate change rather than simply rebuilding.
According to a report compiled by the United Nations, four countries in the region – including Guatemala, Costa Rica, El Salvador, and Nicaragua – are among the 15 nations most vulnerable to natural disasters.