Dominica: Tax Reform to Boost Climate Resilience

 Dominica after hurricane. Originally posted on  CAPE Blog .

Dominica after hurricane. Originally posted on CAPE Blog.

Dominica, a small-island state in the Caribbean, is among the countries most exposed to natural hazards. On September 18, 2017, Hurricane Maria hit Dominica with catastrophic effect. The Post-Disaster Needs Assessment concluded that Hurricane Maria resulted in total damages of US$931 million and losses of US$382 million, which amounts to 226 percent of 2016 GDP. The identified recovery needs for reconstruction and resilience interventions, incorporating the principle of resilience and ‘building back better’, amount to US$1.37 billion. Furthermore, Hurricane Maria struck while Dominica was still recovering from Hurricane Erika, which made landfall on August 27, 2015 and caused losses and damages of 97 percent of GDP.

In response, Prime Minister Roosevelt Skerrit has expressed “plans to make Dominica the first climate resilient nation in the world”. This includes through strengthening the resilience of Dominica’s physical infrastructure and natural environment, but also through building greater fiscal resilience, flexibility and ability to cope with climate events and shocks. On the fiscal resilience side, this includes: fiscal measures to better integrate sustainable development and climate adaptation strategies into development and budget planning processes; incorporating measures and instruments to better manage and cope with contingent and implicit liabilities arising from natural disaster events; fiscal and tax reforms that increase domestic revenues, but also achieve green growth objectives and help meet Dominica’s Nationally Determined Contribution (NDC); and reforms to increase the efficiency and effectiveness of social protection programs. The authorities have requested World Bank support on potential tax reforms to increase domestic revenue mobilization to further their NDC efforts and increase budget and fiscal resiliency. In response to this request, Climate Action Peer Exchange (CAPE) is funding the preparation of a report on how to reform existing fiscal policies on fuel, vehicles and durables and the existing environmental surcharge system; electricity and waste pricing, and fiscal policy for encouraging reforestation.

This post was originally published on the Climate Action Peer Exchange blog.