Under Canada’s Disaster Financial Assistance Arrangements (DFAA), the federal government can provide provinces with funds for emergency response and recovery in the event of a natural disaster. This assistance has historically been provided on an ad hoc basis. In recent years, the amount of DFAA assistance has significantly increased without any auditing to determine how effective and efficient these expenditures are in offsetting economic losses due to natural disasters. The goal of this paper is to examine the implications of natural disaster compensation and assistance programs for economic efficiency. A framework is developed to determine if government assistance expenditures have offset economic losses to a specific industry using a case study of the 1998 ice storm and the eastern Ontario maple syrup industry. Projections of damage recovery are used to measure the economic impact of the storm, and a comparison is then drawn between the change in producers’ welfare and government assistance. The implications of the findings for the case study and for future natural disaster assistance programs in Canada are discussed.
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