Analysing the impact of natural disasters on the New Zealand economy: lessons from the international literature
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In recent decades, natural disasters appear to be occurring more frequently and be more intensive, exacerbated by growing population and urbanisation. Apart from the loss of life, natural disasters are likely to have chronic adverse impacts on the economy. Public interest in the study of natural disasters has been growing globally. However, progress on mitigation programmes has been slow. Disaster mitigation is usually placed outside of economic development planning; the study of disaster mitigation strategies and the impact of disaster on economic systems are not well resourced (Ibarrarán et al., 2009). Evaluations of disaster impact focusing on small economies, like New Zealand are particularly limited. Recent events such as the Canterbury earthquakes have highlighted the fragility of New Zealand’s economy to natural disasters. This study investigates the impact of natural disasters, focusing on the Canterbury earthquakes on New Zealand’s macroeconomic performance and how it influences the country’s overall economic position. It addresses what lessons New Zealand can learn from the relevant international literature in terms of disaster mitigation strategies, macroeconomic policy implications as well as an evaluation of its institutional arrangements in the face of a disaster such as the role of the private and public insurance along with an examination of the Earthquake Commission (EQC). The international disaster experiences emphasised that pre-disaster strategic plans, in terms of preparedness and response, are particularly valuable and effective in minimising losses, in spite of the large cost in human and economic terms. New Zealand has generally responded to the earthquakes relatively well. However, a number of concerns have been raised, including a reduction in insurance and re-insurance availability, deterioration in the fiscal and debt capacity, increase in bank funding costs, problems in building standard, and deficiencies in the EQC system.