  Many empirical studies have shown that government quality is a key
determinant of vulnerability to natural disasters. Protection against natural
disasters can be a public good -- flood protection, for example -- or a natural
monopoly -- early warning systems, for instance. Recovery from natural
disasters is easier when the financial system is well-developed, particularly
insurance services. This requires a strong legal and regulatory environment.
This paper reviews the empirical literature to find that government quality and
democracy reduce vulnerability to natural disasters while corruption of public
officials increases vulnerability. The paper complements the literature by
including tax revenue as an explanatory variable for vulnerability to natural
disasters, and by modelling both the probability of natural disaster and the
damage done. Countries with a larger public sector are better at preventing
extreme events from doing harm. Countries that take more of their revenue in
income taxes are better that reducing harm from natural disasters.
