The economic impacts of weather-related shocks in Nigeria: A first step toward the quantification of fiscal risks

The objective of this report is to provide an initial assessment of the economic impacts of weather-related shocks in Nigeria, focusing on three key dimensions: (i) damage to physical assets, (ii) growth impacts, and (iii) household-level impacts. In addition, this study discusses how these economic impacts put pressure on public finances and constitute a considerable source of fiscal risk.

This assessment aims to establish a foundation for engaging a policy dialogue with the Federal and State governments on the management of fiscal risks associated with weather-related events. Potential damage to assets and well-being impacts constitutes contingent liabilities that can translate into additional public expenditure when weather-related shocks materialize. These effects must therefore become an essential dimension of fiscal policy making and be incorporated into the broader fiscal risk management framework to ensure an adequate budgetary response. From a fiscal perspective, the growth effects of weather-related events can be approached as traditional macroeconomic shocks that slow down economic growth and result in lower-than anticipated fiscal revenues.