This index is then multiplied by the cubed maximum wind speed \(S(max)_{g,t}^{3}\) in grid g and year t as calculated by Eq. Correspondence to 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. A one standard deviation strong event has a probability of 8.9% among events above zero for agricultural damage and 8% for population damage.Footnote 16, Heatmap of InputOutput coefficient averages, 19902015. 3, the empirical approach is described. 7), we can only see significant changes in one quarter of all InputOutput connections, while in model 4 for the direct costs, only two sector aggregates are negatively affected. 2019) or the destruction of vessels. 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). (2019) show that indirect impacts are nearly as high as direct impacts. Furthermore, one could also argue that the estimation results are biased by the fact that certain regions have a higher exposure to tropical cyclones than others. For the sample average (0.88) of the regression of Column (1), this effect can be translated into a decrease of \(-298\)%, as displayed in Fig. They show that there are nearly no lagged responses present. Social impacts TBC homes destroyed. The data are collected every year for as many countries and regions as possible.Footnote 11 The sample used in my analysis covers the 19702015 period and includes a maximum of 205 countries.Footnote 12, To analyze potential sectoral shifts within the economy after a tropical cyclone, I take advantage of the InputOutput data of EORA26 (Lenzen etal. Springer, New York, London, Toya H, Skidmore M (2007) Economic development and the impacts of natural disasters. Nearly 2 million people have died globally due to tropical cyclones. Princeton University Press, Princeton, Book In subsequent years, tropical cyclones negatively affect the majority of all sectors. On average, the sector aggregates agriculture, hunting, forestry, and fishing (A&B) and mining and utilities (C&E) are only slightly dependent on other sectors, while there is a stronger dependence for the remaining sectoral aggregates. It demands more input from three other sector aggregates, while the manufacturing sectors use less input from it. Surprisingly, the sector aggregate mining and utilities turns negative three years after the tropical cyclone has hit the country. While there exists a lot of theoretical work on the importance of cross-sectional linkages in consequence of a shock (see e.g., Dupor 1999; Horvath 2000; Acemoglu etal. 2012), and the higher exposure of people in large urban agglomerations near oceans (World Bank 2010), the overall damage and the number of people affected by tropical cyclones have been increasing since the 1970s (Guha-Sapir and CRED 2020). Additionally, I allow for country-specific linear trends \(\mu _i*t\). The results of the InputOutput analysis, summarized in Appendix A.6.2, are a little less robust. In total, I extend this research area in three ways: First, I introduce a new objective damage measure that allows for sector specific exposure of tropical cyclones. volume78,pages 545569 (2021)Cite this article. 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. 2017). Impacts of tropical storms Buildings and bridges can be destroyed, people can get into difficulties in the water, and roads and railways can become damaged. Environ Res Lett 13(7):074034. They can best be summarized by three possible hypotheses: recovery to trend, build-back-better, and no recovery (Chhibber and Laajaj 2008). At the same time, other sectors demand more from the manufacturing sectors, resulting in a zero aggregate negative effect for them. This is because there are regions showing increases or . I also checked for different lag lengths, but could hardly find any effect above a lag length of five years. 2012). Based on physical intensity data, Hsiang (2010) analyzes the effect of hurricanes on seven sectoral aggregates in a regional study for 26 Caribbean countries. For example, Loayza etal. 1315 show the cumulative results for different lag lengths (5, 10, 15), and Tables 1315 exhibit the underlying estimations. Econ Syst Res 25(1):2049, Lenzen M, Malik A, Kenway S, Daniels P, Lam KL, Geschke A (2019) Economic damage and spillovers from a tropical cyclone. 2012), recent empirical studies focus on the shock propagation in production networks within the United States of America (Barrot & Sauvagnat 2016) or after single natural disasters, such as the 2011 earthquake in Japan (Boehm etal. The increase in tropical cyclone losses has led to concern that anthropogenic climate change is contributing to this trend. Tropical cyclones are immensely powerful and can travel up to speeds of 65 km/h. 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. In total, the majority of all sectoral aggregates experience lagged negative growth effects due to tropical cyclones. To analyze the effect of tropical cyclones in the longer run, I introduced lags of the tropical cyclone damage variable to the main specification 4. Tables 3 and 4 in Appendix A.5 show the main descriptive statistics for all variables used in this study. Sectoral GDP is defined as gross value added per sector aggregate and is collected for different economic activities following the International Standard Industrial Classification (ISIC) revision number 3.1. 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. The absolute size of this effect is approximately more than 2.5 times the size of the coefficient in the wholesale, retail trade, restaurants, and hotels sector aggregate. Econ Lett 94(1):2025, United Nations Statistical Division (2015a). They are responsible for a demand shock in the mining and quarrying sectoral aggregate, leading to delayed negative growth effects being persistent over 10years. For example, Miranda etal. For example, Loayza etal. However, we still can learn from this analysis of how certain direct effects evolve. How do tropical storms affect people and the environment? Queensland has 20% of Australia's sugar cane production, but . This is an improvement in comparison to Hsiang (2010) who only focuses on 26 Caribbean countries, which are highly exposed but only account for 11% of global GDP in 2015 (United Nations Statistical Division 2015c). J Dev Econ 88(2):221231, Onuma H, Shin KJ, Managi S (2020) Short-, medium-, and long-term growth impacts of catastrophic and non-catastrophic natural disasters. 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. Fifteen thousand people were housed in temporary shelters in North Carolina. Hence, I interpolate the data to generate yearly observations. Environ Resource Econ 78, 545569 (2021). Tropical cyclones can have devastating economic consequences. The seventh tropical depression, fifth named storm and the second . J Appl Meteorol Climatol 52(8):16881697, Blanc E, Strobl E (2016) Assessing the impact of typhoons on rice production in the Philippines. Springer, Dordrecht and New York, p 940, Lenzen M, Kanemoto K, Moran D, Geschke A (2012) Mapping the structure of the world economy. Second, I use this new damage data to analyze all (exposed) countries (84) to tropical cyclones worldwide, which allows me to obtain more generalizable results.Footnote 2 Third, I conduct a thorough assessment of the long-term sectoral influences of tropical cyclones, as there is evidence, that long-term effects on total GDP exist (Felbermayr and Grschl 2014; Hsiang and Jina 2014; Onuma etal. As climate change is warming ocean temperatures, there is potentially more of this fuel available. 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. \end{array}\right. } As per the guidelines of the World . 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. Stagnant water can cause the spread of disease, and transportation or communication infrastructure may have been destroyed, hampering clean-up and rescue efforts. The weighted tropical cyclone damage variables are orthogonal to economic growth as well as the InputOutput coefficients, and the panel approach allows me to identify the causal effect. (2012) use data from EM-DAT as main input for their explanatory variables. The storm damaged and destroyed famand, vital infrastructure and thousands of homes, dealing another devastating blow to families still trying to put their lives together after. 2018) or exposed area (Hsiang and Jina 2014) to weight the respective physical intensities of tropical cyclones. How did the tropical cyclone Eloise impact the economy and people. The new climate-economy literature. The analysis is conducted on a country-year level. The robustness tests that frequently fail are those with Conley-HAC and NeweyWest standard errors. Bakkensen LA, Park D-SR, Sarkar RSR (2018) Climate costs of tropical cyclone losses also depend on rain. Taking all considerations together, I calculate the following tropical cyclone damage for each country i and year t: where \(w_{g,t-1}\) are the exposure weights, agricultural land, or population, in grid g in period \(t-1\). More recent studies have started to use physical data, such as observed wind speeds, to generate a more objective damage function for the impacts of tropical cyclones (e.g., Hsiang 2010; Strobl 2011; Felbermayr and Grschl 2014; Bakkensen etal. (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. Table 1 presents the results of the main specification for each of the seven annual sectoral GDP per capita growth rates. The underlying tables are only included for the direct sectoral effects, while the robustness tables for the InputOutput analysis are available upon request. Within the agriculture, hunting, forestry, and fishing sectors, the negative effects become less pronounced with a zero effect being present after fouryears, while the wholesale, retail trade, restaurants, and hotels sectoral aggregate experiences a persistent negative growth even after 20years. 2019), Felbermayr and Grschl (2014) show that storms from the previous fiveyears can also have a negative growth effect. The word hurricane is only used in the Atlantic, Caribbean Sea, Gulf of Mexico, and eastern Pacific, for storms that sustain winds at or above 74 miles per hour. It is possible that the economy exhibits positive growth rates after a first negative growth shock. 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. 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). A tropical cyclone is a low pressure system that develops over tropical waters, characterized by high winds and heavy rain. Likewise, the contemporaneous, non-significant effect for the remaining sectors can be explained as a result of lower vulnerability and/or efficient recovery measures, which attenuate the potentially negative effect of tropical cyclones. How did the Tropical Cyclone Florence impact the people communities? Am Econ J Appl Econ 8(2):123153, Guha-Sapir D, CRED (2020) EM-DAT: the emergency events database. These factors are a decrease in the forward speed of a storm, increased intensity, and more water vapor in the atmosphere. Tropical cyclones have the largest negative effect on the agriculture, hunting, forestry, and fishing aggregate compared to other sectoral aggregates. Winds have lessened to 45 mph. The most interesting changes can be observed within the single sectors of the manufacturing (D) aggregate. In a similar manner, Mohan and Strobl (2017) find evidence that a positive growth effect of the construction sector, financed by international aid or government programs, lead to a fast recovery of South-Pacific Islands after tropical cyclones.Footnote 27, Significant effects of tropical cyclone damage on disaggregated InputOutput coefficients. Together with further control variables, Table 2 in Appendix A.4 lists the exact definition of all variables used. 2020). This heat is the energy that is released or absorbed during a phase change in water. (2018). What are 3 impacts of tropical cyclones? One reason could be that the destruction of productive capital outweighs the higher number of orders. \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. 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). 1.Environment . Wilmington remained cut off for at least a week following Hurricane Florence delaying the distribution of food, water and . 7. Additionally, a new damage measure is developed that considers the varying levels of exposure of different sectors. 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). The situation is completely different in the wholesale, retail trade, restaurants, and hotels sector aggregate, where a negative influence can be observed over almost the entire 20-year period. Stagnant water can cause the spread of disease, and transportation or communication infrastructure may have been destroyed, hampering clean-up and rescue efforts. Mon Weather Rev 108(8):12121218, Horvath M (2000) Sectoral shocks and aggregate fluctuations. I also tested for lagged cumulative effects. The wind speed drops with distance to the center of the hurricane and as soon as it makes landfall. The South Pacific has recently been hit by particularly destructive cyclones like Winston and Pam. 3, their intensity and frequency are spread considerably between years and countries. To underpin the causal identification, I conduct a falsification test, where I introduce leads instead of lags of the Damage variable, as well as a Fisher randomization test. 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. 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. The storm currently has a maximum sustained wind speed of 25 mph and is located 105 miles west-northwest of New York City at the time of publication, as reported by CBS News. 2019). 4.2 demonstrates, this effect may be driven by less demand from the manufacturing sectors. The coefficients show the increase of the respective damage variable by one standard deviation. It is therefore important to examine their effects over time (Felbermayr and Grschl 2014; Hsiang and Jina 2014). Stata J 17(3):630651, Holland GJ (1980) An analytic model of the wind and pressure profiles in hurricanes. Cumulative lagged influence of tropical cyclone damage on sectoral GDP growth (20years). The number in parentheses compares the coefficients to the sample average of the respective InputOutput coefficient (in %). Compared to the existing literature, the non-existing of a direct positive contemporaneous response of the construction sector is a new finding. By calculating the annual sectoral GDP per capita growth rate, I lose the first year of observation of the panel. The gray shaded area specifies the respective 95% confidence bands, and the red line depicts the connected estimates. In general, a one standard deviation increase in tropical cyclone damage is associated with a decrease in the annual growth rate in the sector aggregate agriculture, hunting, forestry, and fishing of \(-\,2.62\) percentage points. Given these positive demand effects, one may ask why a significant contemporaneous positive direct effect for the construction sector cannot be seen. (2012) investigate the effect of natural disasters on three sectors (agriculture, manufacturing, service) in a global sample for the period 19612005. 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. Last week, the East Coast prepared for Hurricane Florence, which roared through the Carolinas and Georgia. Int J Disaster Risk Sci 10(2):166178, Munich R (2018) NatCatSERVICERelevant natural loss events worldwide 19802018. Flooding could prove devastating. In addition to damaging wind speed, salty sea spread and storm surge can cause salinization of the soil, leaving it useless for cultivation. At first, the circulation was ill-defined, but by the evening and overnight, persistent convection had occurred and was beginning to show signs of better organization. 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 order to examine tropical cyclones as exogenous weather shocks, I pursue a panel data approach with year and country fixed effects in a simple growth equation framework (Strobl 2012; Dell etal. Sven Kunze. Direct negative impacts can result from the destruction of productive capital, infrastructure, or buildings, and thereby can generate a negative income shock for the whole economy (Kousky 2014). This behavior most likely speaks for an enduring risk adjustment of tourists. Use the Previous and Next buttons to navigate the slides or the slide controller buttons at the end to navigate through each slide. The sectors least affected by indirect changes are the agriculture (ag), recycling (re), private households (ph), and export (ex) sectors. The authors find that after the 2008 Wenchuan Earthquake neighboring counties suffer from indirect negative growth effects due to changes within the manufacturing sectors. Second and most importantly, I contribute to the literature on InputOutput analysis of natural disasters. It is a unification of all best track data on tropical cyclones collected by weather agencies worldwide. The sectoral GDP data originates from the United Nations Statistical Division (UNSD) (United Nations Statistical Division 2015b). It rather points to the presence of (delayed) negative effects of tropical cyclones from which the sectors cannot recover. The procedure is hierarchical and reaches from other official governmental publications over publications from other international organizations to the usage of data from commercial providers (United Nations Statistical Division 2015b). Glob Environ Change 26:183195, Knapp KR, Kruk MC, Levinson DH, Diamond HJ, Neumann CJ (2010) The international best track archive for climate stewardship (IBTrACS). J Monet Econ 43(2):391409, Elliott RJ, Strobl E, Sun P (2015) The local impact of typhoons on economic activity in China: a view from outer space. 2014). Econ J 122(559):6491, Dell M, Jones BF, Olken BA (2014) What do we learn from the weather? It . The sample period hence reduces to 19712015. 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? This large negative effect is not surprising. Moreover, for the vast majority of sectors, the indirect effects do not last longer than oneyear. Asterisks and color intensities indicate p values according to: ***\(p<0.01\), **\(p<0.05\), *\(p<0.1\). Ecol Econ 85:105115, Schreck CJ, Knapp KR, Kossin JP (2014) The impact of best track discrepancies on global tropical cyclone climatologies using IBTrACS. The storm started to form as the result of an area of low pressure over Western Africa. Furthermore, only a minority of studies explicitly investigate the disasters influences on sectoral economic development. It is based on a physical wind model and thereby overcomes criticism of report-based damage data. During 6 February, the Australian Bureau of Meteorology (BoM) reported that the tropical low had developed into a Category 1-cyclone on the Australian scale . Ann Rev Resour Econ 8(1):4375, Hsiang SM, Jina AS (2014) The causal effect of environmental catastrophe on long-run economic growth: evidence from 6,700 cyclones. Anyone you share the following link with will be able to read this content: Sorry, a shareable link is not currently available for this article. Appendix A.3 provides a more detailed description of the composition of the individual ISIC categories. https://unstats.un.org/unsd/snaama/Metadata/Glossary#, United Nations Statistical Division (2015b) Methodology for the national accounts main aggregates database. Sci Rep 9(1):20452322. This finding clearly opposes the build-back-better hypothesis as well as the recovery to trend hypothesis. Furthermore, I cluster the standard errors at broader regional levels to account for the event that tropical cyclones can also affect neighboring countries within one region.Footnote 31 Additionally, I control for the yearly tropical cyclone frequency per year, I test a different damage variable (mean instead of maximum cubed wind speed per year), and include tropical cyclone basin fixed-effects in further robustness tests. Figure 8 reveals some patterns that are not visible on the aggregate level. The individual colors represent different wind speed intensities. (Color figure online). Additionally, the lagged dependent variable controls for a sluggish adjustment to shocks of the individual sector input composition. 00:00 00:00 An unknown error has occurred 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. However, these growth rates are simply not high enough to reach the pre-disaster growth path. Evidence from developing countries. Nearly 2 million people have died globally due to tropical cyclones. Based on damage estimates from EM-DAT, the authors find a negative effect for the agricultural and a positive effect for the industrial sector. 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. Depending on the level of aggregation, I run 49 (7*7) or 676 (26*26) different regressions. A damage function that takes into account only the exposed population would underestimate the damage caused to the agricultural sector, given the large unpopulated but agriculturally used areas in the north and west of Australia. This is not surprising since the manufacturing (D) sector needs a lot of input materials from other sectors (Sieg etal. To view a copy of this licence, visit http://creativecommons.org/licenses/by/4.0/. About how did tropical cyclone eloise impact the economy. 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. 6, these positive demand shocks lead to a positive growth impulse in the construction sector. In total, I use two different aggregation methods. In the years following a tropical cyclone, the majority of sectors experience negative growth effects. PLoS ONE 14(4):121, Strobl E (2011) The economic growth impact of hurricanes: Evidence from U.S. coastal counties. World Dev 105:231247, Bertinelli L, Strobl E (2013) Quantifying the local economic growth impact of hurricane strikes: an analysis from outer space for the Caribbean. As demonstrated in Fig. During 5 February, a tropical low was located south of Bali, Indonesia. For the sector aggregate wholesale, retail trade, restaurants, and hotels, a one standard deviation increase in tropical cyclone damage cause a decrease of \(-\,1.16\) percentage points of the annual per capita growth rate.
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