A hurricane loss risk assessment of coastal properties in the caribbean: Evidence from the Bahamas

Abstract

We conduct a risk assesment of losses to coastal properties due to tropical storms in The Bahamas. To this end we use the physical characteristics of a set of synthetically generated storms to estimate local wind and storm surge exposure and couple with these damage functions. Employing these to a unique set of properties on the island of Great Exuma we then calculate out likely losses, in terms of loss of real estate value as well as potential income, due to the storms. Our analysis suggests that while annual expected losses are small, this disguises low probability storms that could cause considerable damage. Moreover, we find that most of the losses are due to storm surge rather than strong winds. This may be particularly important for low-lying islands like The Bahamas facing future challenges of sea-level rise.