The Bahamas faces an $850 million in estimated average annual loss (AAL) from windstorms like hurricanes, and a probable maximum loss (PML) of $20.5 billion, according to the findings of a new Ministry of Finance and World Bank report.
The startling figures were published yesterday in the first annual Climate Spending Report for The Bahamas, which used a climate and disaster budget tagging methodology to track climate change-related spending and is expected to help the government make informed decisions and prioritize climate and disaster investments.
“Extreme weather events, particularly hurricanes, are common in The Bahamas and can significantly impact economic growth and social development. In addition to the severe impacts of Hurricane Dorian in 2019, which exceeded US$3.4 billion in economic losses for both the public and private sectors, the country faces an average annual loss (AAL) from windstorms of US$850 million and a probable maximum loss (PML) for a 250-year event of US$20.5 billion – nearly 45 percent of the country’s capital stock.”
The report also revealed that the government intended to spend just over $72 million or 2.3 percent of its total 2021/2022 budget on climate change, almost 50 percent of which was planned spending, followed by wages and salaries at 38 percent, and then subsidies and services at both under ten percent.
“In 2021/2022, the government of The Bahamas intended to spend $72,184,093.92 or 2.3 percent of its total budget on climate change. The projected spend on disaster risk management is lower compared to climate change and estimated at $54,391,665.68, or 1.7 percent of the total budget. The climate spending report used the government finance statistics (GFS) classification of economic segments to determine the amount of expenditure on climate change and disaster risk management,” the authors of the report said.
“Environmental protection is the function of government that includes both disaster and climate change management. In the estimates of expenditure for 2021/2022, the government provided summary budgets by functions of government. Environmental protection was allocated $108,909,435 from the recurrent budget and $9,150,000 from the capital budget, for a total of $118,079,435 or approximately 3.7 percent of the total budget. Environmental protection expenditure is, however, more heavily directed at climate change, as climate change events can precipitate or lead to natural disasters.”
In a statement yesterday accompanying the report, the Ministry of Finance said the government intends to use the information on the amount of expenditure allocated under both the recurrent and capital budgets to adequately address the effects of climate change and mitigate against future impact.
“Additionally, climate and disaster relevant expenditure, when traceable in the budget, will not only inform the development of climate change policies, but will also gauge the impact of targeted climate spending on climate and disaster resilience,” the statement said.
“Finally, the climate spending report will strengthen accountability and transparency by improving the government’s ability to account for, monitor, manage, prioritize, and report on climate change and disaster resilient spending and investments.”
The climate tagging exercise began in February 2021.
“By implementing a climate and disaster budget tagging system, The Bahamas will be able to better identify and manage these expenditures and activities for improved resilience.
“Through climate and disaster tagging, the government of The Bahamas is expected to benefit in several ways, including an improved ability to account for, monitor, manage, prioritize, and report on climate-smart and disaster-resilient investments in line with the government’s efforts to enhance public investment management under various public financial management reforms; improved understanding and management of spending on disasters by phase (before, during, or after) and by sector and program (e.g., which ministries are carrying the burden of disaster-related expenditures); improved access to and mobilization of climate finance; and enhanced transparency and demonstration of its commitment to climate action and disaster reduction,” the report said.