Google Scholar, Auffhammer M, Hsiang SM, Schlenker W, Sobel A (2013) Using weather data and climate model output in economic analyses of climate change. 2632). 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). Additionally, Cole etal. Econ Inquiry 46(2):214226, de Mel S, McKenzie D, Woodruff C (2012) Enterprise recovery following natural disasters. 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. Clim Change 114(3):745768, Ghosh A (1958) Input-output approach in an allocation system. Effects of tropical cyclone damage on sectoral GDP growth compared to sample average. 2012). To analyze potential indirect effects which could emerge because of changes in the InputOutput composition of the individual sectors, I test the following set of equations for the different Input(j)Output(k) combinations: where \(IO_{i,t}^{j,k}\) indicates the InputOutput coefficient of sectors j and k in year t and country i. This corresponds to a mean annual global loss of USD 16.7 billion (measured in constant 2005 USD) for the sample average. 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. 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). 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. Additionally, a new damage measure is developed that considers the varying levels of exposure of different sectors. In further specifications, I include additional control variables \({\mathbf {Z}}_{i,t-1}\) to account for potential socioeconomic or climatic influences. 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. This finding clearly opposes the build-back-better hypothesis as well as the recovery to trend hypothesis. 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). 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. 2.Economy 3.People /communities The error bars depict the 95% confidence intervals. What impact do cyclones have on the economy? | how did tropical cyclone 00:00 00:00 An unknown error has occurred While some studies provide evidence of only a short-term economic impact of tropical cyclones (Bertinelli and Strobl 2013; Elliott etal. Earth Syst Sci Data 9(2):927953, Klomp JG, Valckx K (2014) Natural disasters and economic growth: a meta-analysis. Furthermore, the results of the randomization test show that the \(H_0\) of no effect of tropical cyclone damage can be rejected at the 1% and 5% level of confidence for the agriculture, hunting, forestry, and fishing and wholesale, retail trade, restaurants, and hotels sectors, respectively. Agricultural land and population count in Australia, 2008. Compared to the existing literature, the non-existing of a direct positive contemporaneous response of the construction sector is a new finding. Kunze, S. Unraveling the Effects of Tropical Cyclones on Economic Sectors Worldwide: Direct and Indirect Impacts. 2014). (Color figure online). However, as an additional robustness test, I also show a regression where I include these outliers and the results remain unchanged. Latent heat is another critical factor that influences the development of tropical cyclones. Gross value added is defined by the UNSD as the value of output less the value of intermediate consumption (United Nations Statistical Division 2015a). In Pictures: Cyclone Eloise displaces thousands in Mozambique 4 and 6 with the population weighted damage for the agricultural sectoral aggregate. Based on a fine-gridded wind field model, I generate a new sector-specific damage measure weighted by either agricultural land use or population data. 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. 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. Originating from a tropical wave over West Africa, Florence quickly organized upon its emergence over the Atlantic Ocean. 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. 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. Tropical Cyclone Eloise, which hit southeastern Africa in January 2021, caused widespread flooding and landslides, resulting in at least 21 deaths and. I decide not to use the WIOD database because its country sample is not very exposed to tropical cyclones. The economic impacts of tropical cyclones on a mature destination Notes This figure shows the effect of a one standard deviation increase in tropical cyclone damage on the per capita sectoral GDP growth rate compared to the respective sample average. 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. Nevertheless, we can learn from this analysis the important role of those manufacturing sectors that are not directly affected. As tropical cyclones are exogenous to sectoral economic growth, the greatest threat to causal identification could arise by omitting important climatic variables that are correlated with tropical cyclones (Auffhammer etal. Stat Softw Compon S352601. Circle diameters represent the average proportional share on total GDP ranging from 32% (other activities), over 12% (manufacturing) to 6% (construction).Footnote 25. A tropical cyclone is a low pressure system that develops over tropical waters, characterized by high winds and heavy rain. 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. One major effort of this paper is to generate a new meaningful sectoral damage variable on a country-year level. 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. 2013), I control for the mean temperature and precipitation of a country in further specifications. These surges, sometimes called tidal waves, can drown people and animals, and are often the greatest killers in a cyclone. Am Econ J Appl Econ 8(2):123153, Guha-Sapir D, CRED (2020) EM-DAT: the emergency events database. Cyclone Eloise - Wikipedia In: Bobrowsky PT (ed) Encyclopedia of natural hazards. To be consistent with the remaining analysis, I aggregate the given 26 sectors to the previously used seven sectoral aggregates.Footnote 14 For my analysis, I calculate the InputOutput coefficients by dividing the specific input of each sector by the total input of each sector given in the transaction matrix of the data: The resulting InputOutput coefficients \(IO^{j,k}\) range between 0 and 1 in year t. They indicate how much input from sector k is needed to produce one unit of output of sector j. Consequently, the InputOutput coefficients give an idea of the structural interactions of sectors within an economy and hence help to disentangle the indirect effects of tropical cyclone damage.Footnote 15. The number in parentheses compares the coefficients to the sample average of the respective InputOutput coefficient (in %). It is therefore important to examine their effects over time (Felbermayr and Grschl 2014; Hsiang and Jina 2014). The individual colors represent different wind speed intensities. This importance for the sectoral composition was already demonstrated by Bulte etal. Further losses can occur if business continuity is lost through disrupted supply of intermediate inputs from, or distribution to, other businesses. Nearly 2 million people have died globally due to tropical cyclones. 6. The new climate-economy literature. Cumulative lagged influence of tropical cyclone damage on sectoral GDP growth (20years). 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. This is because there are regions showing increases or . In total, the majority of all sectoral aggregates experience lagged negative growth effects due to tropical cyclones. The results can be found in Fig. Tropical cyclones are compact, circular storms, generally some 320 km (200 miles) in diameter, whose winds swirl around a central region of low atmospheric pressure. In general, this analysis reveals production scheme transformations that can result from both supply and demand changes of the sectors due to tropical cyclones. 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. The damaging winds are responsible for serious destruction of buildings and vegetation. This is not surprising since the manufacturing (D) sector needs a lot of input materials from other sectors (Sieg etal. Technical report, Centre for Environmental Data Analysis (CEDA), World Bank (2010) Natural hazards, unnatural disasters: the economics of effective prevention: overview. 4, I introduce a lagged dependent variable, since I suspect a strong path dependence of the InputOutput coefficient, i.e., most sectors plan their inputs at least one period ahead.