Based on damage estimates from EM-DAT, the authors find a negative effect for the agricultural and a positive effect for the industrial sector. It is therefore important to examine their effects over time (Felbermayr and Grschl 2014; Hsiang and Jina 2014). J Appl Meteorol Climatol 52(8):16881697, Blanc E, Strobl E (2016) Assessing the impact of typhoons on rice production in the Philippines. Agricultural land and population count in Australia, 2008. These empirical studies all share that they use firm-level data to draw conclusions on upstream and downstream production disruptions. Figure 6 illustrates the cumulative point estimates of the past influence of tropical cyclone damage on the different sectoral growth variables.Footnote 22 The x-axis represents the lags of the damage variable, while the y-axis indicates the size of the cumulative coefficient \(\beta\) (in standard deviations). The storm was named by the Australian Bureau of Meteorology on 4 February and and finally came to an end on 14 March. However, time-delayed effects must also be taken into account since some damage, such as supply-chain interruptions or demand-sided impacts, will only be visible after a certain time lag (Kousky 2014; Botzen etal. Q J Econ 110(4):11271170, Klein Goldewijk K, Beusen A, Doelman J, Stehfest E (2017) Anthropogenic land use estimates for the holoceneHYDE 3.2. Originating from a tropical wave over West Africa, Florence quickly organized upon its emergence over the Atlantic Ocean. Int J Disaster Risk Sci 10(2):166178, Munich R (2018) NatCatSERVICERelevant natural loss events worldwide 19802018. The individual colors represent different wind speed intensities. The logged per capita value added is not included for the robustness tests of the indirect effects of model 6, because it already compromises a lagged dependent variable. The seventh tropical depression, fifth named storm and the second . [2] Between 1979 and 2017, there was a global increase in the proportion of tropical cyclones of Category 3 and higher on the Saffir-Simpson scale. Hsiang (2010) also finds a negative effect of hurricanes for this sectoral aggregate for the Caribbean countries, whereas Loayza etal. The sixth named storm, third hurricane, and the first major hurricane of the 2018 Atlantic hurricane season, Florence originated from a strong tropical wave that emerged off the west coast . Therefore, I re-estimate the results of Eqs. The largest negative impacts can be attributed to the annual growth in the agriculture, hunting, forestry, and fishing sector aggregate, where a standard deviation increase in tropical cyclone damage is associated with a decrease of 262 percentage points of the annual sectoral growth rate. Springer, Dordrecht, New York, pp 481494, Chapter Figure 8 also offers an explanation for the downturn of the mining and utilities (C&E) sector aggregate after some years, as shown in Fig. I show point coefficient estimates as well as accumulated effects and error statistics calculated via a linear combination of the lagged \(\beta _{t-L}\) coefficients.Footnote 17. Originally a low-pressure system north of the Gulf of Carpentaria, Ingrid moved eastward and developed into a tropical cyclone in the Coral Sea on 6 March 2005. If material is not included in the article's Creative Commons licence and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder. The build-back-better hypothesis describes a situation where natural disasters first trigger a downturn of the economy, which is then followed by a positive stimulus, leading to a higher growth path than in the pre-disaster period. Hsiang (2010) also finds the largest negative effects of tropical cyclones for the agricultural sector aggregate, while Loayza etal. Moreover, I include time fixed effects \(\delta _t\) to account for time trends and other events common to all countries in the sample. These factors are a decrease in the forward speed of a storm, increased intensity, and more water vapor in the atmosphere. Ten mass-feeding kitchens were set up. How did the tropical cyclone impact the people communities? 16 in Appendix A.5. It is not empirically clear how long past tropical cyclones influence present economic growth rates. 25111299), Oosterhaven J (2017) On the limited usability of the inoperability IO model. Additionally, it has been shown, that low- and middle-income countries seem to be more vulnerable to the negative impacts of natural disasters than high-income countries (Felbermayr and Grschl 2014; Berlemann and Wenzel 2018). Natural Hazard-Induced Disasters and Production Efficiency: Moving Closer to or Further from the Frontier? 2014). At the same time, other sectors demand more from the manufacturing sectors, resulting in a zero aggregate negative effect for them. 3, their intensity and frequency are spread considerably between years and countries. In total, the majority of all sectoral aggregates experience lagged negative growth effects due to tropical cyclones. Environ Sci Technol 46(15):83748381, Lenzen M, Moran D, Kanemoto K, Geschke A (2013) Building Eora: a global multi-region input-output database at high country and sector resolution. 2019). Proc Natl Acad Sci USA 107(35):1536715372, Hsiang SM (2016) Climate econometrics. First, tropical cyclones frequently cause a surge in ocean waters causing sea . They are, however, aware of data problems, such as incomplete reports, fluctuating quality of the reports, and correlation with GDP. Evidence from developing countries. Perhaps the most challenging task is to identify critical sectors that may be responsible for widespread spillover effects leading to substantial modifications in other sectors production input schemes. Geosci Model Dev 12(7):30853097, Bacheler NN, Shertzer KW, Cheshire RT, MacMahan JH (2019) Tropical storms influence the movement behavior of a demersal oceanic fish species. From a theoretical perspective, a natural disaster can have both positive and negative effects. As investors kept their eyes on the weather and its potential for destruction, estimates emerged of up to $27 billion in hurricane damage. This change can be regarded as reconstruction efforts, which is also reflected in the relatively rapid recovery of the agricultural sector aggregate in Fig. Positive effects include, for instance, as a consequence of the destruction of capital, that the marginal productivity of capital increases, making it more attractive to invest in capital in the affected area (Klomp and Valckx 2014). (2012) find no significant for the service sector.Footnote 21 Likely reason for this downturn could be less (domestic and international) touristic income for the restaurant and hotel sectors (Hsiang 2010; Lenzen etal. In detail, this model can be described by the following set of regression equations: where all variables are defined as in Eq. Tropical Cyclone Cheneso was a strong tropical cyclone that affected Madagascar in January 2023. How did the Tropical Cyclone Florence impact the people communities? Finally, the standard errors \(\epsilon _{i,t}\) could be biased by the autocorrelation of unobservable omitted variables (Hsiang 2016). Sci Rep 9(1):20452322. How did tropical cyclone Florence impact the economy? The underlying estimations can be found in Tables 1213 in Appendix A.5. Upon examining the underlying estimates in Tables 1213 in Appendix A.5, it is evident that the transport, storage, communication sectoral aggregate also turns negative, at least at the 90% confidence interval.Footnote 23. In subsequent years, tropical cyclones negatively affect the majority of all sectors. Surprisingly, the sector aggregate mining and utilities turns negative three years after the tropical cyclone has hit the country. The purpose of this study is to advance our understanding of anthropogenic influences on tropical cyclones by quantifying the impact of climate change so far, and in the future, on the intensity . The agriculture, hunting, forestry, and fishing sector aggregate first depicts negative growth rates but then quickly recovers after four years. Furthermore, I use a more specific damage function than Hsiang & Jina (2014) which takes account of different sectoral exposure. In coastal areas, storm surges can lead to flooding, the destruction of infrastructures and buildings, the erosion of shorelines, and the salinization of the vegetation (Terry 2007; Le Cozannet etal. Econ Inquiry 46(2):214226, de Mel S, McKenzie D, Woodruff C (2012) Enterprise recovery following natural disasters. Economic sectors most vulnerable to direct capital destruction of tropical cyclones must be identified. It demands more input from three other sector aggregates, while the manufacturing sectors use less input from it. Provided by the Springer Nature SharedIt content-sharing initiative, Over 10 million scientific documents at your fingertips, Not logged in For storm surge damage this is not possible, since there exists no global data set so far. In consequence to tropical cyclone damage, less tourists visit affected countries (Hsiang 2010), since they perceive these destinations as too risky to travel to (Forster etal. Hurricane Florence reached its maximum wind speed of 130 knots (category 4 hurricane) on 11 September and made landfall on 14 September in North Carolina. Use the Previous and Next buttons to navigate the slides or the slide controller buttons at the end to navigate through each slide. The growth literature predicts that some potential positive or negative impacts of natural disasters emerge only after a few years. Appendix A.6 exhibits the resulting robustness tests for the direct and indirect sectoral effects.Footnote 33 For the direct sectoral effects, the significant results remain robust in all different specifications underlining their credibility for the empirical model used.Footnote 34 While the placebo test yields no significant coefficients, the coefficients and p-value remain relatively stable in all remaining robustness tests, as summarized in Fig. After one year, we can also detect a positive effect in the construction sector, which is not surprising given the higher number of orders due to reconstruction efforts. Clim Change 114(3):745768, Ghosh A (1958) Input-output approach in an allocation system. 2018; Elliott etal. Rev Econ Stat 93(2):575589, Strobl E (2012) The economic growth impact of natural disasters in developing countries: evidence from hurricane strikes in the Central American and Caribbean Regions. Open Access funding enabled and organized by Projekt DEAL. The impact of weather on economic growth and its production factors, Climate change and developing country growth: the cases of Malawi, Mozambique, and Zambia, A framework for assessing the economic impacts of Arctic change, https://github.com/davidnbresch/climada/blob/master/docs/climada_manual.pdf, https://www.munichre.com/en/solutions/for-industry-clients/natcatservice.html, https://ideas.repec.org/c/boc/bocode/s352601.html, http://www.nhc.noaa.gov/verification/verify5.shtml, https://unstats.un.org/unsd/snaama/Metadata/Glossary#, https://unstats.un.org/unsd/snaama/assets/pdf/methodology.pdf, http://data.un.org/Explorer.aspx?d=SNAAMA, http://creativecommons.org/licenses/by/4.0/. Older empirical studies suffer to a large extent from endogeneity problems in their econometric analysis because their damage data are based on reports and insurance data, such as the Emergency Events Database (EM-DAT). (2020) provide evidence that after hurricane strikes in Central America, a short-term negative growth period (12months) is compensated by a positive recovery in the second year. The results are particularly pressing, as tropical cyclones will continue to intensify due to global warming (Knutson etal. Cyclones can produce flooding in two ways. Nature 455(7209):9295, Emanuel K (2011) Global warming effects on U.S. hurricane damage. To be in line with the related growth literature, I estimate a further specification where I add a set of socioeconomic control variables (Islam 1995; Strobl 2012; Felbermayr and Grschl 2014). This corresponds to a mean annual global loss of USD 16.7 billion (measured in constant 2005 USD) for the sample average. Torrential rainfall can cause serious in-land flooding, thereby augmenting the risk coming from storm surges (Terry 2007). J Eur Econ Assoc 18(6):33373375, Forster J, Schuhmann PW, Lake IR, Gill JA (2012) The influence of hurricane risk on tourist destination choice in the Caribbean. What are 3 impacts of tropical cyclones? For both variables, I use the year-by-year variation calculated from the Climatic Research Unit (CRU) version 4.01, which is available at a resolution of approximately 50km since 1901 (University of East Anglia Climatic Research Unit et al. J Dev Econ 111:92106, Fetzer T (2020) Can workfare programs moderate conflict? In addition, in a recent working paper, Hsiang and Jina (2014) even demonstrate a long-term negative impact of tropical cyclones of up to 20 years. Section 5 concludes with a discussion of the results and highlights policy implications. In addition, they can also have a significant impact on the national economy, particularly in countries like India where a large proportion of the population is dependent on agriculture. For tropical cyclones, no empirical cross-country study on indirect effects exists so far. The results can be found in Fig. To view a copy of this licence, visit http://creativecommons.org/licenses/by/4.0/. Furthermore, a shortage in the labor force can lead to a wage increase, which can serve as an incentive for workers from other regions to migrate to the affected region, also leading to a positive effect (Hallegatte and Przyluski 2010). This importance for the sectoral composition was already demonstrated by Bulte etal. While the distribution reveals that on average, geographically smaller countries, such as Hong Kong, Dominica or Jamaica, have a higher damage, there exists a difference between both damage measures, even for the highly exposed countries. In contrast to Eq. Therefore, they take 5-year averages of the number of affected people normalized by the total population as main explanatory variable. Exposed countries are defined as having at least one positive damage observation over the sample period. 18. Slider with three articles shown per slide. Tropical Cyclone Eloise was the strongest tropical cyclone to impact the country of Mozambique since Cyclone Kenneth in 2019 and the second of three consecutive tropical cyclones to impact Mozambique in the 2020-21 South-West Indian Ocean cyclone season. This may be the reason why, on the aggregate level for indirect influences (see Fig. I also tested for lagged cumulative effects. Panel (a) displays the percentage of agricultural land, whereas (b) shows the distribution of population in Australia in 2008. Econometrica 49(6):14171426, Noy I (2009) The macroeconomic consequences of disasters. Country-year observations above two standard deviations are labeled with the respective ISO3 code. Sept. 16: Some areas receive as much as 34 inches of rain from Sept. 13 to Sept. 16. Acemoglu D, Carvalho VM, Ozdaglar A, Tahbaz-Salehi A (2012) The network origins of aggregate fluctuations. In the second test, I take the mean wind speed cubed \((S(mean)^3_{g,t})\) above 92 km/h per grid and year to calculate the \(damage_{i,t}\) (see Appendix Table 41 and Figs. Second, only the maximum wind speed per grid cell and year is used for the calculation of the tropical cyclone damage. 2 contains a description of the data source, introduces the construction of the tropical cyclone damage measure, and presents descriptive statistics. These regions include East Asia and Pacific, Europe and Central Asia, Latin America and Caribbean, Middle East and North Africa, North America, South Asia, and Sub-Saharan Africa. In order to design effective mitigation and adaptation disaster policies to this threat, it is important to understand the economic impact of natural disasters. High levels of moisture in the air and low wind sheer formed showers and thunderstorms. J Econ Geogr 19(2):373408, Cuaresma JC, Hlouskova J, Obersteiner M (2008) Natural disasters as creative destruction? Before 2000, only decadal data are available. Better post-disaster assistance is not the only required improvement; policymakers should also find ways to better prepare the affected sectors of their economy for possible effects of tropical cyclones before they strike. However, the country fixed effects partly control for this concern. The agricultural sector relies heavily on environmental conditions as most of its production facilities lie outside of buildings and are hence more vulnerable to the destructiveness of tropical cyclones. Alfred-Weber-Institute for Economics, Heidelberg University, Bergheimerstrasse 58, Heidelberg, 69115, Germany, You can also search for this author in Rev Econo Stat 101, Botzen WJW, Deschenes O, Sanders M (2019) The economic impacts of natural disasters: a review of models and empirical studies. From 1980 to 2018 tropical cyclones were responsible for nearly half of all natural disaster losses worldwide, with damage amounting to an aggregate of USD 2111 billion (Munich Re 2018). volume78,pages 545569 (2021)Cite this article. Flooding could prove devastating. Stagnant water can cause the spread of disease, and transportation or communication infrastructure may have been destroyed, hampering clean-up and rescue efforts. Tropical cyclones can have devastating economic consequences. 2010). First, I run two randomization tests: a Placebo test by using leads instead of the contemporaneous measure of the damage variable and a Fisher randomization test, where I randomly permute the years.Footnote 29 Second, to rule out potential omitted variable biases, I include additional climatological variables (precipitation and temperature) and a set of socioeconomic variables (population growth rate, economic openness, the growth rate of the gross capital formation, and logged per capita value added of the respective sector).Footnote 30 Third, I test different trend specifications: region-specific, nonlinear, and no trends at all. This is because there are regions showing increases or . Econometrica 80(5):19772016, Article However, since agricultural areas are seldom highly populated, using a population-weighted damage function for the agricultural sectors would be biased. Nat Hazards Earth Syst Sci 19(1):137151, Loayza NV, Olaberra E, Rigolini J, Christiaensen L (2012) Natural disasters and growth: going beyond the averages. However, as an additional robustness test, I also show a regression where I include these outliers and the results remain unchanged. Figure 8 reveals some patterns that are not visible on the aggregate level. Tropical cyclones are compact, circular storms, generally some 320 km (200 miles) in diameter, whose winds swirl around a central region of low atmospheric pressure. (2018). Nevertheless, we can learn from this analysis the important role of those manufacturing sectors that are not directly affected. Both variables are associated with the occurrence of tropical cyclones since they only form when water temperatures exceed 26 \(^{\circ }\)C and torrential rainfalls usually constitute part of them. Earth Syst Sci Data 9(2):927953, Klomp JG, Valckx K (2014) Natural disasters and economic growth: a meta-analysis. Some areas experience record rainfall with widespread flooding and predictions for it to get worse. Fifteen thousand people were housed in temporary shelters in North Carolina. Admittedly, this will not fully solve potential endogeneity problems, and concerns about bad controls (Angrist & Pischke 2009) and over-controlling (Dell etal. Econ Disasters Clim Change 4(3):657698, Mohan P (2017) Impact of hurricanes on agriculture: Evidence from the Caribbean. Stagnant water can cause the spread of disease, and transportation or communication infrastructure may have been destroyed, hampering clean-up and rescue efforts. Freddy has finally been declared over by the French Meteorological service. It claimed overall more than 50 deaths. It would be tedious to show \(26\,\times \,26\) regression models, Fig. Out of 49 parameter estimates, only 12 are significantly different from zero.Footnote 26 As expected, the heavily damaged agriculture, hunting, forestry, and fishing sector aggregate experiences the most changes. In: Bobrowsky PT (ed) Encyclopedia of natural hazards. Since the tropical cyclone data has global coverage since 1950, I am able to introduce lags of up to 20years without losing observations of my dependent variable, which ranges from 1971 to 2015. Cumulative lagged influence of tropical cyclone damage on sectoral GDP growth (20years). Most worryingly, the majority of all sectors experience delayed negative effects underpinning how far away the international community remains from a build-back better or recovery to trend situation for tropical cyclone-affected economies. This exogenous measure allows me to identify an immediate negative growth effect of tropical cyclones for two out of seven sectoral aggregates including agriculture, hunting, forestry, and fishing and wholesale, retail trade, restaurants, and hotels. 1 but only for values above 92 km/h. The sum of these exposure weights \(w_{g,t-1}\) is divided by the total sum of the weights \(W_{i,t-1}\) in country i in period \(t-1\). Tropical cyclones have the largest negative effect on the agriculture, hunting, forestry, and fishing aggregate compared to other sectoral aggregates. The new climate-economy literature. However, we still can learn from this analysis of how certain direct effects evolve. The arrows depict all significant coefficients between the sectoral aggregates, with negative coefficients in red and positive in green. It asks for less input from the wholesale, retail trade, restaurants, hotels and mining and utilities sector aggregates, which results from a supply shock in the agricultural sector. 4, I introduce a lagged dependent variable, since I suspect a strong path dependence of the InputOutput coefficient, i.e., most sectors plan their inputs at least one period ahead. - 103.17.108.37. 4.2 demonstrates, this effect may be driven by less demand from the manufacturing sectors. The winds are driven by this low-pressure core and by the rotation of Earth, which deflects the path of the wind through a phenomenon known as the Coriolis force. 2012). Tropical cyclones are immensely powerful and can travel up to speeds of 65 km/h. Other basins have different names for the same phenomenon: tropical cyclone. Tropical cyclones are large, cyclonically rotating wind systems that form over tropical or sub-tropical oceans and are mostly concentrated on months in summer or early autumn in both hemispheres (Korty 2013 ). This will provide further insights into whether production processes are seriously distorted by tropical cyclones. Therefore, I include the mean level of temperature and precipitation as additional climate controls in a further specification. Open Access This article is licensed under a Creative Commons Attribution 4.0 International License, which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons licence, and indicate if changes were made. First, as shown by Nickell (1981), there is a systematic bias of panel regressions with a lagged dependent variable and fixed effects. I decide to only examine changes in the InputOutput coefficients and not at indirect costs because it almost needs no assumptions. Color intensities indicate p values according to: \(p<0.01\), \(p<0.05\), \(p<0.1\). It is possible that the economy exhibits positive growth rates after a first negative growth shock. The different economic activities are classified as follows with the respective ISIC codes given in parentheses: agriculture, hunting, forestry, and fishing (A&B); mining, and utilities (C&E); manufacturing (D); construction (F); wholesale, retail trade, restaurants, and hotels (GH); transport, storage, and communication (I); other activities (JP), which include, inter alia, the financial and government sector. Possible mechanisms for this situation are, for example, additional capital flowssuch as remittances from relatives living abroad (Yang 2008)international aid (deMel etal. In comparison, in my analysis, I take meteorological data as input which is exogenous to the political and economic situation, contains all existing tropical cyclones, and has no quality fluctuations. First, I only use the damage fraction due to maximum wind speed of tropical cyclones. Appendix A.6 first shows the results of the randomization tests, followed by coefficient plots that summarize the remaining specifications. Storms that are strongest originate off the west coast of Africa because they have two weeks worth of warm water to build up over. However, one year later, as shown in Fig. The outcomes of this study can serve as a guide for local governments and international organizations to revise and refine their adaptation and mitigation strategies. \end{array}\right. } 2008; Mendelsohn etal. The impact of cyclones can be extremely devastating, both in terms of loss of life and damage to infrastructure. 2013). Am Econ J Appl Econ 8(2):123153, Guha-Sapir D, CRED (2020) EM-DAT: the emergency events database. 2018).
Jack Grealish Gareth Southgate Daughter,
Treorchy Comprehensive School Staff List,
Hunter Funeral Home : Watertown,
What Does Doyle Mean In Middlesbrough,
Articles H