Extreme Weather Events as Drivers of Climate Official Development Assistance: Evidence from Caribbean Small Island Developing States

Caribbean Small Island Developing States (SIDS) are highly vulnerable to the impacts of climate change, particularly extreme weather events. These events cause significant economic, social and environmental damage, hindering sustainable development necessitating international assistance. Climate-related Official Development Assistance (ODA) plays a crucial role in supporting SIDS’ climate action through mitigation and adaptation. This study investigates how extreme weather events influence the allocation of climate ODA to Caribbean SIDS. Further, given that humanitarian aid following a disaster may create disincentives for funding climate action we investigate whether such aid may have crowded out climate-related ODA. To this end, we construct a panel data set of climate ODA, humanitarian aid, and destruction indices for hurricanes and extreme rainfall for a sample of 14 Caribbean countries over the period 2002–2021. The results from our regression analysis demonstrate that extreme weather events are drivers of climate-related ODA into Caribbean SIDS but with a 1 year lag- for a particular country and year an average damaging rainfall and hurricane event would increase climate ODA by 180% one year after their occurrence and by a further 76% two years later. Extreme rainfall has a more direct impact on increasing Climate ODA for mitigation while hurricanes do the same for adaptation. Additionally, humanitarian aid following these events crowds out climate ODA particularly for adaptation- for every US$ 1 million in humanitarian aid received climate ODA is reduced by 2.1%.