Introduction

Natural disaster frequently disrupts economic and social development in Pacific Island countries (PICs). Over two decades, there has been an increase in the number as well as the intensity of such occurrences and it is the developing states that are bearing the full brunt of these events. Consequently, after a natural disaster, the developing states suffer economically, socially and environmentally thus enhancing the apparent inequality amongst the ‘rich’ and the ‘poor’.

The Pacific Islands are classified as Small Islands Developing States (SIDS)[1]. The island nations are also known as Small Islands Developing States (SIDS) and are located on the southern hemisphere surrounded by the Pacific Ocean. The Island nations have unique social, economic and environmental attributes. The remoteness of the Island states combined with their size, limited resources and geographic spread provides a narrow economic base imposing additional outlays to trade and transportation. The Pacific Island nations are exposed to external shocks and this has been compounded significantly by recent natural disaster events. Excessive exposure to disasters has eminent macroeconomic impacts on small island nations. (Lee, Zhang and Nguyen 2018) revealed that SIDS suffer from a lower level of investments, and lower Gross Domestic Product (GDP) per capita after a natural disaster. In addition, the study argued that disasters also result in a higher debt to GDP ratio, elevated poverty, and an unstable revenue base.

While there are many forms of natural disaster that occur in the Pacific, this paper will discuss the economic impacts of a tropical cyclone (TC) and explore findings of past models that focused on the economic analyses of these naturally occurring events. This paper is based on analyses from Vanuatu, Fiji, and Tonga. All three island nations were struck with a category 5 tropical cyclones between 2015 and 2018.

Impacts of a Tropical Cyclone on;

1.0 Gross Domestic Product

Damages caused by a category 5 tropical cyclone are in the form of strong winds, flooding and storm surges. The strong winds can directly cause extensive damages to infrastructures and agricultural produce. In addition, cyclones are associated with heavy rains which results in widespread flooding, especially to low lying areas. Ultimately, the strong winds can also result in storm surges in coastal areas resulting in inland flooding of waves that rise as high as 10 feet.

The three island economies were experiencing robust economic growth before the cyclone with an average of 2 to 3 percent growth in the past 5 years. The TCs made landfall in Vanuatu, Fiji, and Tonga in 2015, 2016 and 2018 respectively causing widespread destruction in the urban, rural and maritime areas. For Vanuatu, the estimated economic value of the damages caused by TC Pam was around US$449.4 million and this accounted for approximately 64.1 percent of Vanuatu’s GDP (Vanuatu 2015). For Fiji, the estimated economic value of the destruction was around US$0.9 billion and is around 29.1 percent of GDP (Fiji 2016). The estimated value of damages in Tonga was approximately US$164.1 million and is estimated to be 29.1 percent of GDP (Tonga 2018). The indicator above is self-explanatory, and it is an indication of the scale of the impacts. During the years of the tropical cyclones, Vanuatu and Fiji’s economic growth were -0.8 percent and 0.4 respectively compared to a more robust growth of 2.4 percent and 3.8 in the preceding year. Tonga’s expected growth is projected to slow from around 3.0 percent in 2017 to a mere 0.3 percent for 2018[2].

(McKenzie, Prasad and Kaloumaira 2005) conducted a study on