By NEIL HARTNELL
Tribune Business Editor
The Bahamas has suffered almost triple the amount of hurricane-related losses and economic damage compared to that experienced by other Caribbean countries over the past 20 years, it was revealed yesterday.
The Inter-American Development Bank (IDB), unveiling a $160m “policy based” loan to finance improvements to this nation’s disaster risk management governance, said more frequent and intense storms have cost The Bahamas, its economy and people some $6.7bn in the two decades leading up to 2022.
It pegged that sum as equivalent to more than 50 percent of The Bahamas’ gross domestic product (GDP), or value of its economic output, whereas the loss and damage suffered by Jamaica and Barbados over the same 20 years was estimated at 17 percent and 2 percent, respectively, of their GDPs.
“The economic damage caused by climate-related hazards in The Bahamas, as a percentage of GDP, is higher than in other countries in the Caribbean region. Thus the total damage from disasters in The Bahamas from 2002 to 2022 (over $6.7bn) is equivalent to more than 50 percent of the country’s economy in 2015. Conversely, values for Jamaica and Barbados are 17 percent and 2 percent, respectively,” the IDB report said.
The document reinforces The Bahamas’ extreme vulnerability to hurricanes, weather-related catastrophes and other climate change issues such as sea level rise. When measured in terms of GDP percentages, this nation’s loss and damages are almost three times’ higher on a relative basis when compared to Jamaica. And, in turn, $3.4bn or just over 50 percent of that $6.7bn in total losses and damage was inflicted by Hurricane Dorian in 2019.
“The vulnerability of The Bahamas to climate-related hazards is likely to be further exacerbated by climate change. An IDB report estimates that, taking climate change impact into account, a hurricane with a 100-year return period could cause up to $6bn in economic damages if it were to make landfall in The Bahamas,” the IDB added.
“The report also notes that while a hurricane the size of Dorian has been calculated to occur once every 50-100 years in the past, it is now estimated to occur once every 25 years due to the effects of climate change. Another report estimates that the expected coastal inundation area from a 50-year flood in New Providence will be 15 percent larger by 2050 than it is today due to increased precipitation due to climate change.”
Noting significant deficiencies and weaknesses in The Bahamas’ public policy response to disaster risk management, the IDB paper said the loan proceeds will provide the financial springboard such that this nation will enjoy a 72.7 percent improvement against an index that measures a country’s resilience, governance and ability to cope with - and respond to - catastrophic events such as hurricanes.
The IDB said that, while The Bahamas enjoyed the second best score in the Caribbean in 2020 when benchmarked against its Index on Disaster Risk Management Governance and Public Policy (iGOPP), it still ranked below the wider Latin America average. While, from a regional perspective, The Bahamas’ 22 percent trailed only Jamaica at 25 percent, it was some way off the Western Hemisphere average at 33 percent.
“The results of the IGOPP update point out that The Bahamas has limited legal, institutional and budgetary conditions to implement effective public policies in disaster risk management, resulting in actions which are not always aligned with best international practices and generally insufficient due to scarce funding, [and which] would benefit from more robust legal mandates,” the IDB report said.
The loan initiative’s goal is to drive reforms that will see The Bahamas’ score against this index rise by 72.7 percent in percentage terms, rising from the current 22 percent to a target of 38 percent above the Latin and Caribbean average. Such an improvement, the IDB paper argued, will have a significant impact on reducing hurricane-related fatalities and reducing associated damage and economic loss.
“Once the policy reform proposed by the first operation is implemented, the iGOPP score is projected to increase to 38 percent. Empirical evidence suggests that a disaster risk management governance improvement equivalent to an increase of one point in the iGOPP reduces, on average, by 3 percent the human fatalities caused by disasters and human economic losses by 4 percent,” the report added.
Among the targeted improvements is an overhaul of the Bahamas Building Code and planning regulations. “The Bahamas Building Code of 2003, reviewed in 2016, contains provisions for wind loads, and adopts the standards set by the American Society of Civil Engineers, while the Building Regulation Act of 1971 establishes specific penalties for non-compliance with regulations related to the construction of infrastructure,” the IDB noted.
“However, an update of this code is due. Regarding zoning, the Planning and Subdivision Act of 2010 establishes that risk zoning shall be a determining factor in land use occupation. Nevertheless, there is no legal mandate for public bodies or local governments to reduce the risk within the scope of their functions and jurisdictions, particularly for vulnerable critical infrastructure, and disaster risk analysis is not mandatory for public investment projects.”
The report revealed the Government has asked the IDB to “replenish” the $100m emergency financing it provided following Hurricane Dorian since some $80m of that sum was used in the Category Five storm’s aftermath. Just $20m of that facility remains.
“The main challenges in financial protection are the approval of legislation establishing the formulation of a financial protection structure in the country; to establish a national emergency fund that has the capacity to accumulate resources over time and is based on the annualised loss expectancy and the disaster loss historical records; and the establishment of a legal mandate for public bodies and local governments to cover their public assets with insurance policies or other equivalent mechanisms,” the IDB added.
The $160m loan was contingent on Parliament passing the Disaster Risk Management Bill 2022, which became law in early December 2022. The IDB was heavily involved in preparing this legislation, supplying a senior legal adviser and legal drafter to help craft the Bill.