Caribbean Export OUTLOOK 3rd Edition

27 Pulse of the Caribbean

T he 2017 Atlantic Hurricane Season will forever be remembered as one of the costliest and most traumatic hurricane seasons on record for the Caribbean. Within weeks of each other, three devastatingly powerful hurricanes, Harvey, Irma and Maria, barreled through the island chain and into the North America mainland, leaving thousands dead or displaced and billions of dollars in property damage. The worst affected islands, Dominica and Puerto Rico, were hit directly by Hurricane Maria, and the island of Barbuda (part of Antigua & Barbuda) suffered the wrath of Hurricane Irma. The US Virgin Islands, British Virgin Islands, Anguilla, St. Martin, Guadeloupe, St. Kitts &Nevis and the US State of Texas also suffered varying degrees of devastation. So calamitous was the 2017 Atlantic Hurricane Season that the World Meteorological Organisation took the step of retiring four names at once (Harvey, Irma, Maria and Nate) from their list of names 1 , tied with 1955, 1995 and 2004 and second only to the five retired in 2005. The Climate Prediction Centre of the United States’ National Oceanic & Atmospheric Administration (NOAA) is forecasting a 75% chance that the 2018 Hurricane Season ( June 1 – November 30) will be a ‘near or above normal’ season 2 . With more severe hurricanes likely to be the ‘new normal’ going forward, the immediate policy question facing the region is how to apply the lessons learnt from the 2017 Hurricane Season to foster resilient (re)building to withstand future disasters. Economic Impact Climate Change is one of the most serious development challenges facing Caribbean Small Island Developing States, which despite accounting for less than 1% of global greenhouse gas (GHG) emissions, are disproportionately vulnerable to climate-related events, such as more intense hurricanes. The World Bank estimates that “such natural disasters have cost the region an estimated US$8.6 billion between 1996 and 2015.” 3 A single severe weather event could reset the development clock for an affected country. In 2015 Tropical Storm Erika caused loss and damage equivalent to 90% of Dominica’s GDP and took twenty-four lives. Two years later, before the Nature Isle could fully recover from Erika, Mother Nature sought a rematch in the form of Hurricane Maria, the tenth most intense Atlantic hurricane to date with regard to central pressure. 4 Packing maximum sustained winds of up to 175 miles per hour, Hurricane Maria pummeled the 750 square kilometer island as a Category 5 hurricane, leaving over 30 fatalities, thousands homeless and approximate loss and damage equivalent to 226% of GDP, according to the Post Disaster Needs Assessment (PDNA) conducted by the Government of Dominica. 5 Hurricane Irma destroyed

some 95% of Barbuda’s built infrastructure, causing the island to be evacuated for the first time in three hundred years until some normalcy could be returned. The economic engines which propel most of the region’s economies are all vulnerable toweather-related events. Some 90% of Grenada’s nutmeg plantations were wiped out by the passage of Hurricane Ivan in 2004. 6 Moreover, some 67% of Barbuda’s fishing vessel fleet was damaged, along with the livelihoods of those dependent on fishing. Dominica calculates the damage and losses to its agricultural sector at EC$485M (US$179.6M), including loss of livestock, crops, cropland and agricultural infrastructure. The concentration of the region’s tourism infrastructure generally on or near coastal areas enhances its vulnerability to storm surges, while rising sea levels and erosion affect the third “S” in the ‘sun, sea and sand’ formula. Negative media coverage in the aftermath of a disaster often causes would- be visitors to cancel planned visits to affected countries. The spillover effect for other destinations should not be underestimated, as confusion about which Caribbean islands were affected by the 2017 hurricanes occasioned fallout for some islands which had not been devastated according to a World Travel & Tourism Council (WTTC) Report on Caribbean Recovery. 7 Thankfully, Dominica has restored much of its air and sea connections and just under half of the island’s room stock was back on the market six months after Hurricane Maria’s landfall. Moreover, Dominica has recently launched its Rediscover Dominica campaign and is promoting voluntourism as a niche. Caribbean countries have high levels of trade openness, according to World Bank data. 8 Most Caribbean countries have balance of trade deficits due to dependence on imports, while having narrow merchandise export bases. The structural damage caused by severe weather events to transport and warehousing infrastructure, as well as to export earning sectors, negatively affect a country’s trade and macroeconomic performance. Rebuilding costs are a costly undertaking for countries which are already cash-strapped, with generally middle to high levels of public debt, constrained fiscal space and unpredictable private capital inflows. Post-disaster recovery and rebuilding entail reallocating scarce resources away from social and other development activities. This is compounded by many Caribbean countries’ ineligibility for most forms of concessionary financing due to their classification as middle or high income economies solely on the account of their GDP per capita without factoring in their inherent vulnerabilities. Lessons Learnt Several lessons from the 2017 experience should be borne