Second, only the maximum wind speed per grid cell and year is used for the calculation of the tropical cyclone damage. Other studies analyze the disasters impact on single sectors, such as the agricultural (Blanc and Strobl 2016; Mohan 2017) or the manufacturing sector (Bulte etal. Based on damage estimates from EM-DAT, the authors find a negative effect for the agricultural and a positive effect for the industrial sector. 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. Stata J 17(3):630651, Holland GJ (1980) An analytic model of the wind and pressure profiles in hurricanes. The record-breaking rainfall from hurricanes such as Harvey and Florence can be attributed to three factors that have been linked to a warming climate. 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. Last week, the East Coast prepared for Hurricane Florence, which roared through the Carolinas and Georgia. The individual point estimates are shown in Figs. 2013). In: Bobrowsky PT (ed) Encyclopedia of natural hazards. Asterisks and color intensities indicate p values according to: ***\(p<0.01\), **\(p<0.05\), *\(p<0.1\). However, we still can learn from this analysis of how certain direct effects evolve. (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 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. 4. Sven Kunze. 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. J Urban Econ 88:5066, Elliott RJ, Liu Y, Strobl E, Tong M (2019) Estimating the direct and indirect impact of typhoons on plant performance: evidence from Chinese manufacturers. I follow Emanuel (2011) by including the cube of wind speed above a cut-off wind speed of 92 km/h. Slider with three articles shown per slide. However, one disadvantage of the EORA26 data set is that parts of the data are estimated and not measured. Some areas experience record rainfall with widespread flooding and predictions for it to get worse. Furthermore, although the manufacturing sector shows no direct monetary damage, it is responsible for several changes in the production schemes of other sectors, leading to a monetary downturn in the mining and utilities (C&E) sectoral aggregate. Exposed countries are defined as having at least one positive damage observation over the sample period. PLoS ONE 14(4):121, Strobl E (2011) The economic growth impact of hurricanes: Evidence from U.S. coastal counties. Provided by the Springer Nature SharedIt content-sharing initiative, Over 10 million scientific documents at your fingertips, Not logged in Based on physical intensity data, Hsiang (2010) analyzes the effect of hurricanes on seven sectoral aggregates in a regional study for 26 Caribbean countries. 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. Cyclone Eloise. Other basins have different names for the same phenomenon: tropical cyclone. 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). Use the Previous and Next buttons to navigate the slides or the slide controller buttons at the end to navigate through each slide. As climate change is warming ocean temperatures, there is potentially more of this fuel available. Thus, tropical cyclones are and will continue to be a serious threat to the life and assets of a large number of people worldwide. Cyclones can produce flooding in two ways. In: Bobrowsky PT (ed) Encyclopedia of natural hazards. As per the guidelines of the World . Figure 6 demonstrates that three out of seven sectoral aggregates suffer from delayed negative impacts of tropical cyclones. volume78,pages 545569 (2021)Cite this article. In a single country study on floods in Germany, Sieg etal. Sept. 16: Some areas receive as much as 34 inches of rain from Sept. 13 to Sept. 16. Econometrica 55(3):703708, Newson R (1998) PARMEST: Stata module to create new data set with one observation per parameter of most recent model. Possible mechanisms for this situation are, for example, additional capital flowssuch as remittances from relatives living abroad (Yang 2008)international aid (deMel etal. First, I add to the research area on the macroeconomic effects of disasters. 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. First, as shown by Nickell (1981), there is a systematic bias of panel regressions with a lagged dependent variable and fixed effects. https://ideas.repec.org/c/boc/bocode/s352601.html, Nguyen CN, Noy I (2019) Measuring the impact of insurance on urban earthquake recovery using nightlights. Section 5 concludes with a discussion of the results and highlights policy implications. However, these growth rates are simply not high enough to reach the pre-disaster growth path. (2012) demonstrate that only the agricultural sector is negatively affected. 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. 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. Circle diameters represent the average proportional share on total GDP ranging from 32% (other activities), over 12% (manufacturing) to 6% (construction).Footnote 25. The main causal identification stems from the exogenous nature of tropical cyclones, whose intensity and position are difficult to predict even 24h before they strike (NHC 2016). Econ Disasters Clim Change 4(3):657698, Mohan P (2017) Impact of hurricanes on agriculture: Evidence from the Caribbean. J Econ Lit 52(3):740798, Dupor B (1999) Aggregation and irrelevance in multi-sector models. A study led by Kevin Reed, PhD, Assistant Professor in the School of Marine and Atmospheric Sciences (SoMAS) at Stony Brook University, and published in Science Advances, found that Hurricane. Google Scholar, Albala-Bertrand J-M (1993) Natural disaster situations and growth: a macro-economic model for sudden disaster impacts. (2012) use data from EM-DAT as main input for their explanatory variables. 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. 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. How did the tropical cyclone impact the people communities? 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 . This cost could climb higher as many rivers have yet to crest and may yet cause additional flooding. 2012, 2013). In contrast, for the agricultural sector, it would be misleading to take a nighttime light or a population weight, since these areas have a rather low population density. Evidence from India. 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. J Econ Anal Policy 8(1):13. 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. 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. 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. 4. The variables are measured in constant 2005 USD. This study aims to better understand the sectoral impacts of tropical cyclones by looking at the direct and indirect effects in a large data set covering 205 countries from 1970 to 2015. The country fixed effects \(\theta _i\) control for unobservable time-invariant country-specific effects, such as culture, institutional background, and geographic location. The underlying estimations can be found in Tables 1420 in Appendix A.5. A tropical cyclone is a low pressure system that develops over tropical waters, characterized by high winds and heavy rain. Economica 25(97):5864, Grger A, Zylberberg Y (2016) Internal labor migration as a shock coping strategy: evidence from a typhoon. Econ Lett 94(1):2025, United Nations Statistical Division (2015a). 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. 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. 2019; Cole etal. The InputOutput analysis demonstrates that production processes are only slightly disturbed by tropical cyclones. Finally, I test two sub-samples, one with all potential outliers and one where I include only the countries exposed to tropical cyclones.Footnote 32. This assumption is relaxed in further specifications by allowing more flexible country-specific trends (e.g., squared). The wind speed drops with distance to the center of the hurricane and as soon as it makes landfall. 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. I decide not to use the WIOD database because its country sample is not very exposed to tropical cyclones. 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. Econ J 129(619):13271342, He S (2017) Randomization inference with Stata: a guide and software. This change can be regarded as reconstruction efforts, which is also reflected in the relatively rapid recovery of the agricultural sector aggregate in Fig. Princeton University Press, Princeton, Book Latent Heat and Its Impact on Tropical Cyclones. PubMedGoogle Scholar. 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. Econ Inquiry 46(2):214226, de Mel S, McKenzie D, Woodruff C (2012) Enterprise recovery following natural disasters. 4.2 demonstrates, this effect may be driven by less demand from the manufacturing sectors. Notes This figure demonstrates the distribution of the tropical cyclone damage variable (in standard deviations) for exposed agricultural areas (a) and exposed population (b) from 1970 to 2015, Figure 3 shows the country-year observations of the tropical cyclone damage variable for (a) exposed agricultural land and (b) exposed population. Flooding could prove devastating. Tropical cyclones are immensely powerful and can travel up to speeds of 65 km/h. 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. Fourth, to alleviate concerns of biased uncertainty measures (Hsiang 2016), I calculate different standard errors: NeweyWest standard errors with a lag length of 10 years and Conley-HAC standard errors, allowing for a spatial and temporal dependence within a radius of 1000km and within a time span of 10 years. What are 3 impacts of tropical cyclones? Environ Resource Econ 78, 545569 (2021). These opposing production changes may be one of the reasons why we can see no aggregate direct cost effects. Unraveling the Effects of Tropical Cyclones on Economic Sectors Worldwide: Direct and Indirect Impacts, $$\begin{aligned} S_{g} = {\left\{ \begin{array}{ll} \max (0, ((M - abs(T)) * \frac{R}{D}^\frac{3}{2} *e^{1-\frac{R}{D}^\frac{3}{2}})+T),&{} \text {if }D<10*R \text { from center to outer core} \\ 0, &{} \text {if }D>10*R \text { out of radius}. The results indicate that the policies should focus on the direct costs of tropical cyclones. The new climate-economy literature. As investors kept their eyes on the weather and its potential for destruction, estimates emerged of up to $27 billion in hurricane damage. Note that InputOutput coefficients can only range between 0 and 1. But those that do occur will be more intense and damaging. Depending on the level of aggregation, I run 49 (7*7) or 676 (26*26) different regressions. \end{aligned}$$, $$\begin{aligned} Damage_{i,t}= \dfrac{\sum _{g \in i}w_{g,t-1}}{W_{i,t-1}}*\sum _{g \in i} S (max)_{g,t}^{3}\mathbb {1}_{S(max)>92}, \end{aligned}$$, $$\begin{aligned} IO_t^{j,k}=\frac{Input_t^{j,k}}{Total Input_t^j} \end{aligned}$$, $$\begin{aligned} Growth_{i,t-1->t}^j=\alpha ^j + \beta ^j * Damage_{i,t} +\gamma ^j*{\mathbf {Z}}_{i,t-1} + \delta _t^j + \theta _i^j + \mu _i^j*t + \epsilon _{i,t}^j, \end{aligned}$$, $$\begin{aligned} Growth_{i,t-1->t}^j= & {} \alpha ^j + \sum _{L=0}^{20}( \beta _{t-L}^j * Damage_{i,t-L}) +\gamma ^j*{\mathbf {Z}}_{i,t-1} \nonumber \\&+ \delta _t^j + \theta _i^j + \mu _i^j*t + \epsilon _{i,t}^j, \end{aligned}$$, $$\begin{aligned} IO_{i,t}^{j,k}= & {} \alpha ^{j,k} + \beta ^{j,k} * Damage_{i,t}+ \lambda ^{j,k}*IO_{i,t-1}^{j,k} +\gamma ^{j,k}*{\mathbf {Z}}_{i,t-1} \nonumber \\&+\,\delta _t^{j,k} + \theta _i^{j,k} + \mu _i^{j,k}*t + \epsilon _{i,t}^{j,k}, \end{aligned}$$, $$\begin{aligned} R = {\left\{ \begin{array}{ll} 30, &{} \text {if } L \leqq 24^\circ \\ 30 + 2.5*abs(L)-24, &{} \text {if } L> 24^\circ \\ 75, &{} \text {if } L > 42^\circ . For example, Miranda etal. Econ J 122(559):6491, Dell M, Jones BF, Olken BA (2014) What do we learn from the weather? Furthermore, one can argue that only countries exposed to tropical cyclones are relevant for this analysis; therefore, Table 36 provides a regression of the main result for exposed countries only. 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). 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), and the sector other activities (JP) comprises, among others, the financial sector. It . 2008), and for a cross-section of 153 countries (Toya & Skidmore 2007). J Dev Econ 111:92106, Fetzer T (2020) Can workfare programs moderate conflict? Color intensities indicate p values according to: \(p<0.01\), \(p<0.05\), \(p<0.1\). Compared to the existing literature, the non-existing of a direct positive contemporaneous response of the construction sector is a new finding. (2019) find a build-back-better effect for plants that survived the 1995 Kobe earthquake and Mohan etal. Table 1 presents the results of the main specification for each of the seven annual sectoral GDP per capita growth rates. 2014). They ask significantly less input from other sector aggregates, while, at the same time, sectors from other aggregates ask more input from the manufacturing sectors. 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). Environ Res Lett 13(7):074034. One reason could be that the destruction of productive capital outweighs the higher number of orders. Part of Springer Nature. 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. 2018; Elliott etal. 00:00 00:00 An unknown error has occurred The coefficients show the increase of the respective damage variable by one standard deviation. It remains unclear if there exists some key sector, which, if damaged, results in a negative shock for the other sectors. Together with further control variables, Table 2 in Appendix A.4 lists the exact definition of all variables used. It has been shown that the damage of tropical cyclones increases non-linearly with wind speed and occurs only above a certain threshold. The storm started to form as the result of an area of low pressure over Western Africa. - 103.17.108.37. The sample is larger than the maximum size of recognized sovereign states as it also includes quasi-autonomous countries such as the Marshall Islands, if data are provided for them by the UNSD. Mon Weather Rev 108(8):12121218, Horvath M (2000) Sectoral shocks and aggregate fluctuations. World Dev 40(7):13171336, Mendelsohn R, Emanuel K, Chonabayashi S, Bakkensen L (2012) The impact of climate change on global tropical cyclone damage. J Infrastruct Syst 7(1):112, Hallegatte S, Przyluski V (2010) The economics of natural disasters: concepts and methods. (2012) investigate the effect of natural disasters on three sectors (agriculture, manufacturing, service) in a global sample for the period 19612005. 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. 1315 show the cumulative results for different lag lengths (5, 10, 15), and Tables 1315 exhibit the underlying estimations. http://hdl.handle.net/10986/2512, Yang D (2008) Coping with disaster: the impact of hurricanes on international financial flows, 19702002. Distribution of tropical cyclone damage, 19702015. 3, the empirical approach is described. In total, I use two different aggregation methods. However, an area weight has the disadvantage of including largely unpopulated areas, such as deserts, which are economically meaningless. Additionally, I allow for country-specific linear trends \(\mu _i*t\). 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. Nat Hazards Rev 18(3):04016012, Mohan P, Strobl E (2017) The short-term economic impact of Tropical Cyclone Pam: an analysis using VIIRS nightlight satellite imagery. Storms that are strongest originate off the west coast of Africa because they have two weeks worth of warm water to build up over. 2013), I control for the mean temperature and precipitation of a country in further specifications. 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. Florence was labeled a post-tropical cyclone at 5 a.m. on Tuesday, Sept. 18, according to the National Hurricane Center. Generally speaking, the proposed models offer a simple but strong way for causal interpretation of the impact of tropical cyclones on sectoral growth. On the other hand, EORA26 works continuously on quality check reports and compares its result to other InputOutput databases such as GTAP or WIOD.Footnote 13. The gray shaded area specifies the respective 95% confidence bands, and the red line depicts the connected estimates. Nat Clim Change 2(3):205209, Miranda JJ, Ishizawa OA, Zhang H (2020) Understanding the impact dynamics of windstorms on short-term economic activity from night lights in Central America. Appendix Table 43 and 54 show that the results remain qualitatively unchanged. 2019). 7. If the official data of the countries or regions are not available, the UNSD consults additional data sources. 2014) remain. 25111299), Oosterhaven J (2017) On the limited usability of the inoperability IO model. 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 \(t-1\). 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. Excellent proofreading was provided by Jamie Parsons and Harrison Bardwell. This paper contributes to two strands of the literature. 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. However, the presented results are generalized for 205 countries at most, and every specific country should make an analysis of their specific vulnerability and individual exposure. Torrential rainfall can cause serious in-land flooding, thereby augmenting the risk coming from storm surges (Terry 2007). Given that producers in modern economies are . Freddy has finally been declared over by the French Meteorological service. 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 . The second most indirectly affected sector is the construction sector. 2020). Stat Softw Compon S352601. Loayza etal. First, I only use the damage fraction due to maximum wind speed of tropical cyclones.
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