The underlying estimations can be found in Tables 1420 in Appendix A.5. Weather Clim Soc 3(4):261268, Felbermayr G, Grschl J (2014) Naturally negative: the growth effects of natural disasters. 2020). The cross-sectoral dependence is most pronounced for the manufacturing (D) and other activities (JP)sectoral aggregates. Environ Res Lett 13(7):074034. These empirical studies all share that they use firm-level data to draw conclusions on upstream and downstream production disruptions. The underlying tables are only included for the direct sectoral effects, while the robustness tables for the InputOutput analysis are available upon request. The impact of cyclones can be extremely devastating, both in terms of loss of life and damage to infrastructure. In total, the majority of all sectoral aggregates experience lagged negative growth effects due to tropical cyclones. Econometrica 55(3):703708, Newson R (1998) PARMEST: Stata module to create new data set with one observation per parameter of most recent model. In the first test, I introduce a variable which counts the yearly frequency of tropical cyclones above 92 km/h per country (see Appendix Table 40 and Figs. eSwatini also experienced rainfall.. B.E. 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. Notes The y-axis displays the cumulative coefficient of tropical cyclone damage on the respective per capita growth rates, and the x-axis shows the years since the tropical cyclone passed. 4.2 demonstrates, this effect may be driven by less demand from the manufacturing sectors. 2019). 2019). Since the sample period is reduced to 19902015 due to data availability, I re-estimated the regression model of the main specification 2 for the reduced sample of model 6. 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 \(t-1\). 2017) at a spatial resolution of around \(10\,\times \,10\)km.Footnote 10 To avoid potential endogeneity concerns, I lag the respective weights by one period. Therefore, I propose a new damage measure that explicitly considers these different exposures. Depending on the level of aggregation, I run 49 (7*7) or 676 (26*26) different regressions. Hurricane Florence was a powerful and long-lived Cape Verde hurricane that caused catastrophic damage in the Carolinas in September 2018, primarily as a result of freshwater flooding due to torrential rain. In Sect. Cyclone Eloise. By doing so, I test the null-hypothesis of no effect of the damage variable. Second and most importantly, I contribute to the literature on InputOutput analysis of natural disasters. How do tropical storms affect people and the environment? With this paper, I close this research gap by using an InputOutput panel data set to analyze potential sectoral interactions after the occurrence of a tropical cyclone. http://data.un.org/Explorer.aspx?d=SNAAMA, University of East Anglia Climatic Research Unit, Harris IC, Jones PD (2017) CRU TS4.01: climatic research unit (CRU) time-series (TS) version 4.01 of high-resolution gridded data of month-by-month variation in climate (Jan. 1901Dec. 2019) or the destruction of vessels. In the years following the tropical cyclone, the efforts should be broadened to support the mining, and utilities, and the transport, storage, and communication sectors. Hsiang (2010) also finds the largest negative effects of tropical cyclones for the agricultural sector aggregate, while Loayza etal. J Econ Anal Policy 8(1):13. In the sample used, 70% of all grid-points are hit once by a tropical cyclone per year, whereas 20% are hit twice and 10% more than twice. Previous empirical studies on the relationship between economic development and tropical cyclone damage found a negative influence on GDP growth (e.g., Strobl 2011; Bertinelli and Strobl 2013; Grger and Zylberberg 2016). 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. 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). For storm surge damage this is not possible, since there exists no global data set so far. Econ J 122(559):6491, Dell M, Jones BF, Olken BA (2014) What do we learn from the weather? Nearly 2 million people have died globally due to tropical cyclones. As Sect. For example, Loayza etal. In further specifications, I include additional control variables \({\mathbf {Z}}_{i,t-1}\) to account for potential socioeconomic or climatic influences. Power cables and telephone lines come down, crops are ruined, and water and sewage supplies are affected. To demonstrate the average intersectoral connections within my sample, Fig. Int J Remote Sens 38(21):59926006, Mohan PS, Spencer N, Strobl E (2019) Natural hazard-induced disasters and production efficiency: moving closer to or further from the frontier? 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. The South Pacific has recently been hit by particularly destructive cyclones like Winston and Pam. I further thank seminar participants at Heidelberg University (2016), the AERE Summer Conference in Breckenridge (6/2016), the EAERE Meeting in Zurich (06/2016), the BBQ Workshop in Salzburg (07/2016), the Geospatial Analysis of Disasters: Measuring Welfare Impacts of Emergency Relief Workshop in Heidelberg (07/2016), the Oeschger Climate Summer School in Grindelwald (08/2016), the Conference on Econometric Models of Climate Change in Oxford (9/2017), the Impacts World Conference in Potsdam (10/2017), and the 8th Annual Interdisciplinary Ph.D. Workshop in Sustainable Development at Columbia University (04/2018). 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 . Springer, New York, London, Toya H, Skidmore M (2007) Economic development and the impacts of natural disasters. Moody's estimates that the property loss and direct damages from Hurricane Florence will total $17-22 billion, making it one of the top 10 costliest natural disasters in US history. https://www.munichre.com/en/solutions/for-industry-clients/natcatservice.html, Newey WK, West KD (1987) A simple, positive semi-definite, heteroskedasticity and autocorrelation consistent covariance matrix. To quantify the destructiveness of tropical cyclones, I construct a new damage measure based on meteorological data weighted by different exposure of the sectors. If the official data of the countries or regions are not available, the UNSD consults additional data sources. Sept. 15: Florence is a 350-mile-wide tropical storm that is dumping massive amounts of rain throughout the Carolinas. This change can be regarded as reconstruction efforts, which is also reflected in the relatively rapid recovery of the agricultural sector aggregate in Fig. For large weather systems, the circulation pattern is in a counterclockwise direction in the Northern Hemisphere and a clockwise direction in the Southern Hemisphere. 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. I find a significantly negative influence of tropical cyclones on two sector aggregates including agriculture, as well as trade and tourism. \end{aligned}$$, https://doi.org/10.1007/s10640-021-00541-5, The economic impact of climate risks in China: evidence from 47-sector panel data, 20002014, The Impact of Hurricane Strikes on Short-Term Local Economic Activity: Evidence from Nightlight Images in the Dominican Republic, ICT diffusion and climate change: The role of economic growth, financial development and trade openness, CO2, SO2 and economic growth: a cross-national panel study, The Effects of Natural Disasters and Weather Variations on International Trade and Financial Flows: a Review of the Empirical Literature. Since the EORA26 database also offers the data decomposed for 26 sectors, this section demonstrates the results of model 6 in more detail. \end{array}\right. } The manufacturing sectors use significantly less input from itself, which is not shown in Fig. 2019). 18. 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. 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. WMO continues to monitor the "remarkable" tropical storm, which has cut a destructive path across . To allow for the possibility of multiple tropical cyclones per year and country, I conduct two robustness tests. Bull Am Meteorol Soc 91(3):363376, Knutson T, Camargo SJ, Chan JC, Emanuel K, Ho C-H, Kossin J, Mohapatra M, Satoh M, Sugi M, Walsh K et al (2020) Tropical cyclones and climate change assessment: part II: projected response to anthropogenic warming. Economics of Disasters and Climate Change (pp. I also checked for different lag lengths, but could hardly find any effect above a lag length of five years. The wind speed drops with distance to the center of the hurricane and as soon as it makes landfall. (Color figure online). The dynamic analysis reveals that past tropical cyclones have a negative influence on the majority of sectors providing evidence for the no recovery hypothesis discussed in the literature. Since the commonly used report-based EM-DAT data set (Lazzaroni and van Bergeijk 2014) has been criticized for measurement errors (Kousky 2014), endogeneity, and reverse causality problems (Felbermayr and Grschl 2014), I use meteorological data on wind speeds to generate a proxy for the destructive power of tropical cyclones.Footnote 3 This approach is in line with previous empirical studies (e.g., Hsiang 2010; Strobl 2011, 2012), but I advance this literature by generating a sector-specific damage function. Ten mass-feeding kitchens were set up. Circle diameters represent the average proportional share on total GDP ranging from 32% (other activities), over 12% (manufacturing) to 6% (construction).Footnote 25. Even though, I thereby omit potential rainfall and storm surge damage, it is a common simplification in the literature (Hsiang 2010; Strobl 2011; Strobl 2012; Elliott etal. This does not mean that there have to exist a permanent negative growth effect for every period after the disaster. Econ Lett 94(1):2025, United Nations Statistical Division (2015a). I also tested for lagged cumulative effects. The underlying calculations for these numbers are as follows: agricultural damage: 91/1027 = 0.0886, population damage: 82/1035 = 0.0801. They show that there are nearly no lagged responses present. The storm is expected to affect Duke Energy's 1,870 megawatt (MW) Brunswick and 932MW Harris nuclear plants in North Carolina, as well as potentially the 1,676MW Surry plant in Virginia, owned by Dominion Energy. Flooding could prove devastating. Further losses can occur if business continuity is lost through disrupted supply of intermediate inputs from, or distribution to, other businesses. The second most indirectly affected sector is the construction sector. How did the tropical cyclone Florence impact the following ? The most interesting changes can be observed within the single sectors of the manufacturing (D) aggregate. (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. To implement the Fisher randomization test, I use the code generated by He (2017) and randomly permute the years of the tropical cyclone damage variable for 2000 repetitions. Tropical Cyclone Cheneso was a strong tropical cyclone that affected Madagascar in January 2023. The radius of maximum wind (R, in km) is related to the latitude (L) of the respective raw data tropical cyclone position in the following way: Since the tropical cyclone data are available at global coverage since 1950, I will extend my database later for further specifications. First, I account for the economic exposure by weighting the maximum occurred wind speed per grid cell and year by the number of exposed people living in that grid cell relative to the total population of the country. Color intensities indicate p values according to: \(p<0.01\), \(p<0.05\), \(p<0.1\). It . 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. J Econ Lit 52(3):740798, Dupor B (1999) Aggregation and irrelevance in multi-sector models. Therefore, I propose a new spatial exposure weight for the agricultural sector, namely agricultural land, which consists of the sum of land used for grazing and crops in \(\hbox {km}^{2}\) per grid cell. Econometrica 80(5):19772016, Article First, as shown by Nickell (1981), there is a systematic bias of panel regressions with a lagged dependent variable and fixed effects. The growth literature predicts that some potential positive or negative impacts of natural disasters emerge only after a few years. World Bank Policy Research Working Paper 5507. http://hdl.handle.net/10986/3991, Heinen A, Khadan J, Strobl E (2018) The price impact of extreme weather in developing countries. The storm was named by the Australian Bureau of Meteorology on 4 February and and finally came to an end on 14 March. This is because there are regions showing increases or . This allows me to analyze whether any key sectors exist that, if damaged, result in direct damage of other sectors. Am Econ J Appl Econ 8(2):123153, Guha-Sapir D, CRED (2020) EM-DAT: the emergency events database. For example, Miranda etal. 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. Eastern North Carolina is prone to flooding associated with tropical cyclones (e.g., hurricanes Fran in 1996 and Matthew in 2016) and it is likely that an event similar to the Hurricane Florence . This corresponds to a mean annual global loss of USD 16.7 billion (measured in constant 2005 USD) for the sample average. Hence, I interpolate the data to generate yearly observations. Florence was labeled a post-tropical cyclone at 5 a.m. on Tuesday, Sept. 18, according to the National Hurricane Center. Sept. 16: Some areas receive as much as 34 inches of rain from Sept. 13 to Sept. 16. The result offers a better understanding of the finding of Hsiang & Jina (2014), who show that tropical cyclones have long-lasting negative impacts on GDP growth by demonstrating which sectors are responsible for the long-lasting GDP downturn that they identify. The authors find that after the 2008 Wenchuan Earthquake neighboring counties suffer from indirect negative growth effects due to changes within the manufacturing sectors. Once it makes landfill, Florence is expected to lash coastal communities with 130-mph winds and to dump several feet of water. Econ J 129(619):13271342, He S (2017) Randomization inference with Stata: a guide and software. The individual point estimates are shown in Figs. 2018). In the years following a tropical cyclone, the majority of sectors experience negative growth effects. 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. On Sunday it moved on from Zimbabwe to dump heavy rain on some areas of South Africa's Limpopo, Mpumalanga and KwaZulu-Natal provinces, authorities there said. In: Bobrowsky PT (ed) Encyclopedia of natural hazards. 8 thus reduces the complexity of the analysis by showing only the sign of the significant coefficients together with color intensities representing different p-values. By calculating the annual sectoral GDP per capita growth rate, I lose the first year of observation of the panel. Notes InputOutput coefficients show how much input one sector needs to produce one unit of output. J Dev Econ 111:92106, Fetzer T (2020) Can workfare programs moderate conflict? 2013). Alfred-Weber-Institute for Economics, Heidelberg University, Bergheimerstrasse 58, Heidelberg, 69115, Germany, You can also search for this author in As investors kept their eyes on the weather and its potential for destruction, estimates emerged of up to $27 billion in hurricane damage. Effects of tropical cyclone damage on sectoral GDP growth compared to sample average. \(Damage_{i,t}\) is the derived damage function for country i at year t from Eq. Tropical cyclones can have devastating economic consequences. As my panel has a length of 2545years, depending on the chosen model, I assume this bias will not influence my analysis.Footnote 19 Second, all control variables are measured in \(t-1\) to reduce potential endogeneity problems stemming from the fact that control variables in t can also be influenced by tropical cyclone intensities in t (Dell etal. (2019) demonstrate that there exist a short-term productivity efficiency increase after damaging hurricanes in the Caribbean.
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