The paper "The Macroeconomic Returns of Investment in Resilience to Natural Disasters under Climate Change: A DSGE Approach" examines the economic benefits of investing in adaptation measures to natural disasters (NDs) in the context of climate change. The authors use a Markov switching dynamic stochastic general equilibrium model to evaluate the impact of such investments on the economy. The model assumes that NDs lead to a reduction in the public and private capital stocks and that the government can invest in adaptation at an additional cost. The authors find that the macroeconomic returns to adaptation investment are positive and that the impact of climate change on these returns is significant. The paper concludes by highlighting the importance of investing in adaptation measures to reduce the economic costs of NDs and climate change.
