I find a significantly negative influence of tropical cyclones on two sector aggregates including agriculture, as well as trade and tourism. 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. 2632). 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. For the Placebo test I have to forward the damage variable by two periods, since the damage in t index consists of the affected agricultural land/exposed population in \({t-1}\). The number in parentheses compares the coefficients to the sample average of the respective InputOutput coefficient (in %). Finally, the standard errors \(\epsilon _{i,t}\) could be biased by the autocorrelation of unobservable omitted variables (Hsiang 2016). However, the country fixed effects partly control for this concern. Hsiang (2010) also finds the largest negative effects of tropical cyclones for the agricultural sector aggregate, while Loayza etal. For the latitude and longitude the model takes a spline interpolation, whereas for intensity and time observations it uses a linear interpolation. 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). Excellent proofreading was provided by Jamie Parsons and Harrison Bardwell. 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. 2019), Felbermayr and Grschl (2014) show that storms from the previous fiveyears can also have a negative growth effect. Princeton University Press, Princeton, Book 2013). About 12 hours before Hurricane Florence makes an appearance, both of Duke Energy's North Carolina plants will shut down. The Aftermath of Hurricane Florence | AIR Worldwide However, these growth rates are simply not high enough to reach the pre-disaster growth path. However, the InputOutput analysis shows that production processes are sticky and indirect economic effects are limited. 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. J Econ Anal Policy 8(1):13. By calculating the annual sectoral GDP per capita growth rate, I lose the first year of observation of the panel. 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. This finding undermines the evidence presented in the main specification: Even several years after the occurrence of a tropical cyclone, tourists avoid restaurants and hotels in devastated areas. 2020). 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. The findings could help to explain why there has been no discernible change in the number of tropical cyclones occurring globally over the past 40 years, says Murakami: "We don't find any clear trend in the number of global tropical cyclones over the last 40 years. Freddy: The deadly cyclone that lasted more than a month The underlying estimations can be found in Tables 1420 in Appendix A.5. 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 \(t-1\). The InputOutput analysis demonstrates that production processes are only slightly disturbed by tropical cyclones. J Econ Lit 52(3):740798, Dupor B (1999) Aggregation and irrelevance in multi-sector models. 6: The manufacturing sectors ask significantly less input from it. This change can be regarded as reconstruction efforts, which is also reflected in the relatively rapid recovery of the agricultural sector aggregate in Fig. How did the tropical cyclone impact the people communities? 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. J Appl Meteorol Climatol 52(8):16881697, Blanc E, Strobl E (2016) Assessing the impact of typhoons on rice production in the Philippines. So unfortunately, WA can expect regular cyclone impacts even as the climate . Since the EORA26 database also offers the data decomposed for 26 sectors, this section demonstrates the results of model 6 in more detail. 3, the empirical approach is described. Figure 8 reveals some patterns that are not visible on the aggregate level. Notes The colored areas depict all significant coefficients between the sectors, with negative coefficients in red and positive in green. 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. The red and green arrow colors represent significant negative and positive effects, whereas the color intensities denote different p-values. This large negative effect is not surprising. Hence, I interpolate the data to generate yearly observations. The storm was named by the Australian Bureau of Meteorology on 4 February and and finally came to an end on 14 March. To identify the causal effects of tropical cyclone intensity on sectoral per capita growth, I use the following set of regression equations, which constitutes my main specifications: where the dependent variable \(Growth_{i,t-1->t}^j\) is the annual value added per capita growth rate of sector j in country i. J Econ Geogr 19(2):373408, Cuaresma JC, Hlouskova J, Obersteiner M (2008) Natural disasters as creative destruction? 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. The Effects of Cyclones on the Environment | Sciencing Other studies identify negative effects that are only significant in the short run but are insignificant in the long run (Strobl 2012; Bertinelli and Strobl 2013; Elliott etal. Anthropogenic influences on major tropical cyclone events 1 but only for values above 92 km/h. Nonetheless, the results can provide general guidance for international disaster relief organizations that are active in various countries on how to direct their long-run disaster relief programs. 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. 2018; Elliott etal. The increase in tropical cyclone losses has led to concern that anthropogenic climate change is contributing to this trend. The main specification is estimated for each of the \(j(={1,,7})\) sector aggregates separately. In terms of total losses, this decrease results in a mean yearly loss of USD \(-\,16.7\) billion (measured in constant 2005 USD) for the sample average (USD 5.63 billion). Google Scholar, Kousky C (2014) Informing climate adaptation: a review of the economic costs of natural disasters. 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. Appendix A.3 provides a more detailed description of the composition of the individual ISIC categories. Bull Am Meteorol Soc 101(3):E303E322, Korty R (2013) Hurricane (typhoon, cyclone). Latent heat is another critical factor that influences the development of tropical cyclones. By doing so, I test the null-hypothesis of no effect of the damage variable. The findings can help them to identify the sectors for which they must reduce disaster risk. I decide not to use the WIOD database because its country sample is not very exposed to tropical cyclones. 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? Natural Hazard-Induced Disasters and Production Efficiency: Moving Closer to or Further from the Frontier? First, I add to the research area on the macroeconomic effects of disasters. Economic impact of Hurricane Florence set to devastate US east coast Stagnant water can cause the spread of disease, and transportation or communication infrastructure may have been destroyed, hampering clean-up and rescue efforts. The fourth tropical storm and fifth tropical cyclone of the 2022-23 South-West Indian Ocean cyclone season, Cheneso developed out of a zone of disturbed weather status which was first monitored at RSMC La Runion on 17 January. Each year the impacts of tropical cyclones and other weather, climate and water extremes around the Earth give rise to multiple casualties and significant damage to property and infrastructure, with adverse economic consequences for communities that can persist for many years. 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. However, an area weight has the disadvantage of including largely unpopulated areas, such as deserts, which are economically meaningless. For storm surge damage this is not possible, since there exists no global data set so far. What is the Impact of Coriolis Force and Latent Heat on the.. The individual point estimates are shown in Figs. 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). 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. Environmental impacts of Hurricane Florence flooding in eastern North I show that tropical cyclones have a significantly negative impact on the annual growth rate of two sectoral aggregates: agriculture, hunting, forestry, and fishing and wholesale, retail trade, restaurants, and hotels. Immediately after the disaster, the policy should concentrate on the agriculture, hunting, forestry, and fishing, and the wholesale, retail trade, restaurants, and hotels sector aggregates, as they are most vulnerable, and/or recovery measures have not been conducted efficiently in these sectors. However, as an additional robustness test, I also show a regression where I include these outliers and the results remain unchanged. Note that InputOutput coefficients can only range between 0 and 1. In: Bobrowsky PT (ed) Encyclopedia of natural hazards. 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. 2019). The start of the arrow shows the input, and the end denotes the respective output. The coefficients are interpreted by a one standard deviation increase in tropical cyclone damage (above zero).Footnote 24 For example, due to a standard deviation increase of tropical cyclone damage, the manufacturing sectors use -0.66% less input from the construction sector aggregate relative to the average InputOutput coefficient (0.0045) to produce one unit of output. This means that if a grid cell of a country was exposed to two storms in oneyear, only the physically more intense storm is considered. Despite having the largest negative shock, destroyed capital is relatively quickly replaced. \end{array}\right. } www.emdat.be, Haimes YY, Jiang P (2001) Leontief-based model of risk in complex interconnected infrastructures. (2018). The manufacturing sectors use significantly less input from itself, which is not shown in Fig. This is not surprising since the manufacturing (D) sector needs a lot of input materials from other sectors (Sieg etal. The gray shaded area specifies the respective 95% confidence bands, and the red line depicts the connected estimates. To deal with this problem, I will re-estimate my regression models with Newey and West (1987) as well as spatial HAC standard errors (Hsiang 2010; Fetzer 2020), which allow for a temporal correlation of 10years and a spatial correlation of 1000 kilometer radius.Footnote 20. Distribution of tropical cyclone damage, 19702015. 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. 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 . 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. It claimed overall more than 50 deaths. 00:00 00:00 An unknown error has occurred I also checked for different lag lengths, but could hardly find any effect above a lag length of five years. 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. 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. \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. 2010).Footnote 4, To calculate a new aggregate and meaningful measure of tropical cyclone damage separated by economic sectors on a country-year level, I make use of the CLIMADA model developed by Aznar-Siguan and Bresch (2019) at a resolution of 0.1\(^{\circ }\).Footnote 5 The model employs the well-established Holland (1980) analytical wind field model to calculate spatially varying wind speed intensities around each raw data observation track.Footnote 6 The model is restricted to raw data wind speed intensities above 54 km/h and it interpolates the 6-h raw data observations from the IBTrACS data to hourly observations.Footnote 7. 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. 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. He finds a negative effect for the ISIC sectors agriculture, hunting, forestry, and fishing (A&B), mining, and utilities (C&E), wholesale, retail trade, restaurants, and hotels (GH), but a positive effect for the construction sector (F). Ten mass-feeding kitchens were set up. 4.2 demonstrates, this effect may be driven by less demand from the manufacturing sectors. Furthermore, I use a more specific damage function than Hsiang & Jina (2014) which takes account of different sectoral exposure. 2018) or exposed area (Hsiang and Jina 2014) to weight the respective physical intensities of tropical cyclones. 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. However, on average, the previously found effects can be replicated for 12 out of the 15 robustness tests.Footnote 35 Given the reduced quality of the data and a shorter time span (20years), the InputOutput analysis still offers solid results. Generally speaking, the proposed models offer a simple but strong way for causal interpretation of the impact of tropical cyclones on sectoral growth. 2019). Consequently, \(\beta ^j\) is the coefficient of main interest in this specification. Therefore, I propose a new damage measure that explicitly considers these different exposures. It comprises the logged per capita value added of the respective sector j to simulate a dynamic panel model, the population growth rate, a variable for openness (i.e., imports plus exports divided by GDP), and the growth rate of gross capital formation.Footnote 18 Including these socioeconomic control variables introduce some threats to causal inference. I also tested for lagged cumulative effects. The impact of cyclones can be extremely devastating, both in terms of loss of life and damage to infrastructure. There are two important points to note about this tropical cyclone damage variable. Furthermore, only a minority of studies explicitly investigate the disasters influences on sectoral economic development. Tropical cyclones are immensely powerful and can travel up to speeds of 65 km/h. 2015). Power cables and telephone lines come down, crops are ruined, and water and sewage supplies are affected. 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. 2014). First, tropical cyclones frequently cause a surge in ocean waters causing sea . (2012) investigate the effect of natural disasters on three sectors (agriculture, manufacturing, service) in a global sample for the period 19612005. They are responsible for a demand shock in the mining and quarrying sectoral aggregate, leading to delayed negative growth effects being persistent over 10years. Given that producers in modern economies are . 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. 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.
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