By NEIL HARTNELL
Tribune Business Editor
The Bahamas has returned to pre-hurricane gross domestic product (GDP) levels between four to eight months after each of the last four major storms struck this nation, a study has found.
An Inter-American Development Bank (IDB) report, produced by four authors on the impacts of Dorian, Irma, Matthew and Joaquin, found that this country’s economy rebounded relatively quickly despite the combined $4.4bn worth of damage they inflicted.
This, though, is likely explained by the fact that New Providence, which generates roughly 70-75 percent of the country’s economic output (GDP), was not directly impacted by any of these storms apart from Hurricane Matthew which failed to score a direct hit in October 2016.
Measuring the storms’ impact that measured night light intensity, or luminosity, before and after the hurricanes, the IDB report said: “The economic recovery times to achieve pre-hurricane GDP levels took between four and eight months on average for the hurricanes studied.
“The results show that The Bahamas experiences a decrease in the year-to-year nominal growth rate during the month and quarter of a hurricane impact event, but does not show a contraction of GDP in the year of the event. However, this does not mean that the damages are insignificant.
“On the contrary, the total damage from these four hurricanes was nearly $4.4bn, which is equivalent to about 30 to 40 percent of Bahamian GDP. Additionally, the amount of damage may increase in the future due to the effects of climate change. Therefore, disaster risk reduction and climate change resilience/adaptation should continue to be a priority in public policy for the country’s macroeconomic and socioeconomic sustainability.”
Not surprisingly, given that it impacted New Providence, Hurricane Matthew was found to have inflicted the greatest economic impact on The Bahamas despite the devastation that Hurricane Dorian’s category give winds and storm surge caused on Abaco and Grand Bahama - the the third and second most populated islands, which together generate about 20 percent of national GDP.
“There does indeed seem to be a relation between what islands are affected and the severity of the economic contraction,” the authors found. “Hurricane Matthew had the most severe economic effects in the month of the event (4.4 percent contraction), and although it imposed lower overall costs than Hurricane Dorian, both New Providence and Grand Bahama (the largest islands economically) had the highest costs.”
With the most direct hurricane costs inflicted on the tourism, transport and housing sectors, the report added: “These results therefore signal that there would be substantial benefits from ensuring climate-resilient investments and insurance mechanisms in these three sectors. This calls for their possible prioritisation in climate change adaptation and disaster risk management efforts.
“The Bahamas is extremely vulnerable to the effects of natural disasters and climate change. The country has been hit by 25 hurricanes in the last 25 years that have resulted in substantial human and economic losses.
“Natural disasters are expected to increase in frequency and intensity going forward as a result of the effects of climate change. Therefore, better understanding the effects of these events on the economy of the country, and promoting measures and reforms to mitigate their effects, is becoming more urgent than ever.”
The report reiterated that Dorian inflicted some $2.5bn in direct damage, with indirect costs amounting to $717.3m. “Abaco suffered 87 percent of the direct costs and Grand Bahama 13 percent,” it said. “Direct costs to the social sector reached $1.6bn (64 percent), with most of that in Abaco. Within the social sector damage, almost 93 percent was in the housing sub-sector.
“Approximately 9,000 homes had direct damage, with more than 75 percent of homes in Abaco directly damaged. Direct costs to the productive sector reached $620.9m (24 percent), of which $529.6m (21.2 percent) was in the tourism sector. Direct costs to infrastructure reached $239.1m (9.5 percent), of which 54.1 percent was in the power sector.
“The airports suffered high operational damage due to flooding and roof failure due to high-speed winds, and seaports were impacted by waves, storm surge and wind. The transport sector incurred $50.8m (2 per-cent) in direct costs, with 53 percent of the damage on Grand Bahama, almost all of it sustained at the Grand Bahama International Airport.”
As for the indirect costs, the IDB document added of Dorian: “Of the total, 70 percent was in Abaco, 15 percent in Grand Bahama, and 15 percent in other islands. Indirect costs in the social sector reached $93.2m (13 percent), of which $65m (2.6 percent) was in the housing sector. Indirect costs in the environmental sector reached $27.5m (3.8 percent).
“Wave action, storm surge, and high winds produced partial to severe destruction of mangroves, coral reefs, seagrass beds and forests on both Abaco and Grand Bahama. As a result, ecosystems were left in a critical state and pre-existing vulnerabilities were exacerbated, with an expected decrease in ecosystem services provision in the short and medium term.”