Natural Disasters, Consumption and Climate Change Nexus: The Role of Green Technologies

Abstract We examine the effect that higher natural disaster frequency has on economic outcomes. Even if there is clear evidence that natural disaster incidents are not only going to be more frequent but will also start affecting a wider pool of countries, research has not yet analyzed the economic impact of the interaction between climate change and more frequent extreme rare events. With this study, we try to unveil the mechanisms through which natural disasters and climate change are interconnected, as well as provide policy insights regarding the adoption of greener inputs, in the form of green capital. Our findings suggest that rising temperatures are expected to negatively affect consumption as well as increase debt. We also show that under green technology adaptation, countries are projected to achieve higher levels of consumption and welfare.