how did the tropical cyclone impact the economy of florence how did the tropical cyclone impact the economy of florence
\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. 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. (2012) only differentiate between three sectors: agriculture, manufacturing, and service. 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. In Sect. Additionally, the lagged dependent variable controls for a sluggish adjustment to shocks of the individual sector input composition. Some areas experience record rainfall with widespread flooding and predictions for it to get worse. Technical report, Universit catholique de Louvain (UCL). Figure 6 demonstrates that three out of seven sectoral aggregates suffer from delayed negative impacts of tropical cyclones. Econ Inquiry 46(2):214226, de Mel S, McKenzie D, Woodruff C (2012) Enterprise recovery following natural disasters. 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. It provides data on 26 homogeneous sectors for 189 countries from 1990 until 2015 and is the only InputOutput panel data set with (nearly) global coverage available. This paper contributes to two strands of the literature. 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. The seventh tropical depression, fifth named storm and the second . 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. 1.Environment . A strong pressure gradient rapidly developed within the system as it headed west resulting in a category rating of 5 by 8 March. Before 2000, only decadal data are available. 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. For storm surge damage this is not possible, since there exists no global data set so far. J Dev Econ 97(1):130141, Terry JP (2007) Tropical cyclones: climatology and impacts in the South Pacific. The coefficients range between zero and one. Driven by climate change, at least in some ocean basins (Elsner etal. 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. 2632). To view a copy of this licence, visit http://creativecommons.org/licenses/by/4.0/. 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. 4. Section 5 concludes with a discussion of the results and highlights policy implications. As per the guidelines of the World . J Econ Lit 52(3):740798, Dupor B (1999) Aggregation and irrelevance in multi-sector models. 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. Last week, the East Coast prepared for Hurricane Florence, which roared through the Carolinas and Georgia. 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). Additionally, tropical cyclone intensity is measured by remote sensing methods and other meteorological measurements. 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. 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. J Econ Anal Policy 8(1):13. 2020), and, simultaneously, more people will be exposed to tropical cyclones. Hsiang (2010) also finds the largest negative effects of tropical cyclones for the agricultural sector aggregate, while Loayza 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. In general, this analysis reveals production scheme transformations that can result from both supply and demand changes of the sectors due to tropical cyclones. Tropical cyclones are immensely powerful and can travel up to speeds of 65 km/h. 2008), and for a cross-section of 153 countries (Toya & Skidmore 2007). The tests are conducted with the STATA command parmest (Newson 1998). Therefore, in this section, I investigate, by means of the InputOutput analysis, how the sectors change their interaction after a tropical cyclone has hit a country. \end{array}\right. } The sectors least affected by indirect changes are the agriculture (ag), recycling (re), private households (ph), and export (ex) sectors. Evidence from developing countries. This cost could climb higher as many rivers have yet to crest and may yet cause additional flooding. 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 ). In a single country study on floods in Germany, Sieg etal. Tropical Cyclone Eloise, which hit southeastern Africa in January 2021, caused widespread flooding and landslides, resulting in at least 21 deaths and. www.emdat.be, Haimes YY, Jiang P (2001) Leontief-based model of risk in complex interconnected infrastructures. 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. The robustness tests that frequently fail are those with Conley-HAC and NeweyWest standard errors. As the manufacturing sectors are responsible for much of the counterbalancing of indirect effects, they should not be forgotten by the policymakers, even though they show no direct negative effects. Compared to the existing literature, the non-existing of a direct positive contemporaneous response of the construction sector is a new finding. How did the tropical cyclone Eloise impact the economy and people. 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. 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 cross-sectoral dependence is most pronounced for the manufacturing (D) and other activities (JP)sectoral aggregates. It demands more input from three other sector aggregates, while the manufacturing sectors use less input from it. 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. The coefficients show the increase of the respective damage variable by one standard deviation. 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. 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. eSwatini also experienced rainfall.. Globally they are among the most destructive natural hazards. The underlying tables are only included for the direct sectoral effects, while the robustness tables for the InputOutput analysis are available upon request. 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. First, I add to the research area on the macroeconomic effects of disasters. 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. This will provide further insights into whether production processes are seriously distorted by tropical cyclones. The InputOutput analysis demonstrates that production processes are only slightly disturbed by tropical cyclones. PLoS ONE 14(4):121, Strobl E (2011) The economic growth impact of hurricanes: Evidence from U.S. coastal counties. PubMedGoogle Scholar. Econ J 122(559):6491, Dell M, Jones BF, Olken BA (2014) What do we learn from the weather? The cumulative effects are calculated by F-tests of the respective lag lengths; for example, the coefficient and confidence intervals after two years are calculated by the F-test: Damage+L1.Damage+L2.Damage. In total, I use two different aggregation methods. All weights are available in the HYDE 3.2 data set (Klein Goldewijk etal. 6: The manufacturing sectors ask significantly less input from it. Furthermore, I use a more specific damage function than Hsiang & Jina (2014) which takes account of different sectoral exposure. 2012, 2013). 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. 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. 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). 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. Abstract. 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. Rev Econo Stat 101, Botzen WJW, Deschenes O, Sanders M (2019) The economic impacts of natural disasters: a review of models and empirical studies. 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. As investors kept their eyes on the weather and its potential for destruction, estimates emerged of up to $27 billion in hurricane damage. 2019). 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. (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. 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. Ten mass-feeding kitchens were set up. 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. First, tropical cyclones frequently cause a surge in ocean waters causing sea . Concurrently, the construction sector demands significantly more input (1.84%) from the agriculture, hunting, forestry, and fishing sector. Wilmington remained cut off for at least a week following Hurricane Florence delaying the distribution of food, water and . There are two important points to note about this tropical cyclone damage variable. Therefore, I propose a new damage measure that explicitly considers these different exposures. This does not mean that there have to exist a permanent negative growth effect for every period after the disaster. Future weather. 2010). 2023 Springer Nature Switzerland AG. 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. 2019). The results are particularly pressing, as tropical cyclones will continue to intensify due to global warming (Knutson etal. 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. Environ Res Lett 13(7):074034. 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. 2013), I control for the mean temperature and precipitation of a country in further specifications. Therefore, they take 5-year averages of the number of affected people normalized by the total population as main explanatory variable. The individual colors represent different wind speed intensities. 1 but only for values above 92 km/h. http://www.nhc.noaa.gov/verification/verify5.shtml, Nickell SJ (1981) Biases in dynamic models with fixed effects. 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. The images or other third party material in this article are included in the article's Creative Commons licence, unless indicated otherwise in a credit line to the material. Tropical cyclones only lead to a small number of production process changes with coefficients being relatively small. 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. The agriculture, hunting, forestry, and fishing sector aggregate first depicts negative growth rates but then quickly recovers after four years. This allows me to identify which of the competing hypothesesbuild-back-better, recovery to trend, or no recoveryis appropriate for which sector. However, we still can learn from this analysis of how certain direct effects evolve. Barrot J-N, Sauvagnat J (2016) Input specificity and the propagation of idiosyncratic shocks in production networks. The most interesting changes can be observed within the single sectors of the manufacturing (D) aggregate. 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. 1315 show the cumulative results for different lag lengths (5, 10, 15), and Tables 1315 exhibit the underlying estimations. WMO continues to monitor the "remarkable" tropical storm, which has cut a destructive path across . 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. Economics of Disasters and Climate Change (pp. In addition to damaging wind speed, salty sea spread and storm surge can cause salinization of the soil, leaving it useless for cultivation. Pictured: The East Coast of the U.S. and the Gulf of Mexico viewed by satellite as Hurricane Florence made landfall on September 14. For the agricultural sector, I use the fraction of exposed agricultural land, while for the remaining sectors, I use the gridded population. It is possible that the economy exhibits positive growth rates after a first negative growth shock. 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. Mon Weather Rev 142(10):38813899, Sieg T, Schinko T, Vogel K, Mechler R, Merz B, Kreibich H (2019) Integrated assessment of short-term direct and indirect economic flood impacts including uncertainty quantification. J Mon Econ 45(1):69106, Hsiang SM (2010) Temperatures and cyclones strongly associated with economic production in the Caribbean and Central America. 2014). 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. 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. 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. Gross value added is defined by the UNSD as the value of output less the value of intermediate consumption (United Nations Statistical Division 2015a). 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. To demonstrate the average intersectoral connections within my sample, Fig. 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. Latent Heat and Its Impact on Tropical Cyclones. 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 \({t-1}\). World Dev 21(9):14171434, Angrist JD, Pischke J-S (2009) Mostly harmless econometrics: an empiricists companion. 6, these positive demand shocks lead to a positive growth impulse in the construction sector. 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). 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. Possible reasons for these indirect effects, could be changes in fishing patterns in response to tropical cyclones (Bacheler etal. 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). 2013). Queensland has 20% of Australia's sugar cane production, but . How did the tropical cyclone impact the people communities? 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. Earth Syst Sci Data 9(2):927953, Klomp JG, Valckx K (2014) Natural disasters and economic growth: a meta-analysis. Despite having the largest negative shock, destroyed capital is relatively quickly replaced. The individual point estimates are shown in Figs. By calculating the annual sectoral GDP per capita growth rate, I lose the first year of observation of the panel. The main explanatory variable is a new damage measure for local tropical cyclone intensity based on meteorological data weighted for individual sectoral exposure, which is included in a panel analysis for a maximum of 205 countries over the 19702015 period. Additionally, within the agriculture, hunting, forestry, and fishing sectors, only the fishing sector experiences indirect negative effects. Nature 455(7209):9295, Emanuel K (2011) Global warming effects on U.S. hurricane damage. These opposing production changes may be one of the reasons why we can see no aggregate direct cost effects. I also tested for lagged cumulative effects. I am grateful for comments made by Axel Dreher, Vera Eichenauer, Andreas Fuchs, Lennart Kaplan, Eric Strobl, and Christina Vonnahme. 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. In: Bobrowsky PT (ed) Encyclopedia of natural hazards. 2 contains a description of the data source, introduces the construction of the tropical cyclone damage measure, and presents descriptive statistics. Springer, Dordrecht, New York, pp 481494, Chapter 4. Clim Change 114(3):745768, Ghosh A (1958) Input-output approach in an allocation system. Princeton University Press, Princeton, Book Nevertheless, it unveils the importance of the manufacturing sectors, as already demonstrated by their strong intersectoral connection in Fig. 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). 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. The other proportional shares on total GDP are: Wholesale, retail trade, restaurants, hotels (15%); agriculture, hunting, forestry, fishing (14%); mining and utilities (10%); transport, storage, communication (8%). The manufacturing sectors use significantly less input from itself, which is not shown in Fig. The wind speed drops with distance to the center of the hurricane and as soon as it makes landfall. 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? 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. At the same time, other sectors demand more from the manufacturing sectors, resulting in a zero aggregate negative effect for them. Therefore, I re-estimate the results of Eqs. However, as an additional robustness test, I also show a regression where I include these outliers and the results remain unchanged. In detail, this model can be described by the following set of regression equations: where all variables are defined as in Eq. Circle diameters represent the average proportional share on total GDP ranging from 32% (other activities), over 12% (manufacturing) to 6% (construction).Footnote 25. I take advantage of the International Best Track Archive for Climate Stewardship (IBTrACS) provided by the National Oceanic and Atmospheric Administration (Knapp etal. 2632). The new climate-economy literature. Econometrica 49(6):14171426, Noy I (2009) The macroeconomic consequences of disasters. Cyclone Eloise. Their destructiveness has three sources: damaging winds, storm surges, and heavy rainfalls. Evidence from India. Latent heat is another critical factor that influences the development of tropical cyclones. (Color figure online). 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. Based on physical intensity data, Hsiang (2010) analyzes the effect of hurricanes on seven sectoral aggregates in a regional study for 26 Caribbean countries. Stata J 17(3):630651, Holland GJ (1980) An analytic model of the wind and pressure profiles in hurricanes. Since climatological impacts are most likely nonlinear, I also include squared precipitation and temperature in a further robustness test. 2012), insurance payments (Nguyen and Noy 2019), or government spending (Ouattara and Strobl 2013), which help the economy reach its pre-disaster income level. To the best of my knowledge, this is the first paper that analyzes global sectoral interactions after the occurrence of a tropical cyclone. Cyclones can produce flooding in two ways. Below is the link to the electronic supplementary material. Depending on the level of aggregation, I run 49 (7*7) or 676 (26*26) different regressions. Tropical cyclones cause widespread damage in specific regions as a result of high winds and flooding. Table 1 presents the results of the main specification for each of the seven annual sectoral GDP per capita growth rates. The country fixed effects \(\theta _i\) control for unobservable time-invariant country-specific effects, such as culture, institutional background, and geographic location. Winds have lessened to 45 mph. 2014). Details of How did the tropical cyclone eloise impact the environment? I follow Emanuel (2011) by including the cube of wind speed above a cut-off wind speed of 92 km/h. 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. 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. Additionally, Cole etal. Figure 8 reveals some patterns that are not visible on the aggregate level. It is not empirically clear how long past tropical cyclones influence present economic growth rates. 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 .
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