made disasters were also categorized (bank crisis, debt crisis, war etc). A panel regression methodology was applied. Conclusions are as follows:

- Natural disasters have a significant impact on output that strikes severely but also unfolds over several years. The output pattern typically shows an initial loss, a rebound in the year after the disaster and a subsequent further drag on output.

- Growth falls by 0.65% on impact in a typical median disaster with a cumulative loss of 1.7% (1% and 2.6% for an average disaster).

- It is the uninsured part of catastrophe related losses that drives macroeconomic costs.  Well insured losses can be inconsequential or even positive for economic activity, with the strongest growth enhancing effects appearing in the three years following a catastrophe (i.e the reconstruction stage).

- Insurance tends to be less economically important for earthquakes and volcanic eruptions than for flooding and other meteorological events.

Magnoni and Budzyna (2013) report the ex post results of the employment of property microinsurance by typhoon prone rural communities in the Philippines. They find that insurance reduces vulnerability (specifically through an enhanced ability to raise immediate informal bridging loans) but that faster payout and reduced uncertainty would further reduce the need for alternative coping mechanisms such as reduced consumption. Using data from the same the same population Morsink et al (2011) emphasize that covariate shocks invalidate risk management methods based on the mutual support mechanisms of the poor and increase the risk of falling into poverty traps. However Akter and Fatima (2011) find that ex post micro-credit is preferred to ex ante microinsurance in the case of flood risk for poorer farmers in Bangladesh in a series of bidding tests and using interval regressions. Akter (2012) elaborates on this finding by pointing out the many challenges inherent in introducing an indexed flood insurance product. These include Clarke’s (2011) concerns about complexity and technical nonperformance, but also raise issues of cost and poor consumer protection.

A Primer published for policy makers by the World Bank (Ghesquiere and Mahul, 2010), based on a decade of advising governments and designing new instruments to fill market gaps, points to at least 10 dimensions that governments need to consider when designing a funding plan:

- The amount of funding that may be required.

- When funding is needed (relief, recovery and reconstruction stages).

- When and if funds are like to become available from each funding source post disaster.

- The cost of each funding source.

- Bureaucratic and legal hurdles to releasing each type of funding.

- The limited and highly targeted funds available from most NGOs<sup>37</sup> .

- The country’s capacity to deal with disasters (e.g. large diversified economies versus small island states with narrow economies).

- Opportunity costs associated with each type of funding (e.g. reallocated budget).

- The country’s capacity to utilize the funding effectively (are relevant institutional arrangements such as EMAs in place)<sup>38</sup> .

> 37  See for example https://nacla.org/blog/2012/6/21/undeserved-confidence-broken-system-aid-haiti-%E2%80%93-part-2 38 See Popp (2006) for a full discussion of the importance of institutions.

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