how did the tropical cyclone impact the economy of florence

However, an area weight has the disadvantage of including largely unpopulated areas, such as deserts, which are economically meaningless. Eur Econ Rev 101:441458, Chhibber A, Laajaj R (2008) Disasters, climate change and economic development in Sub-Saharan Africa: lessons and directions. Given these positive demand effects, one may ask why a significant contemporaneous positive direct effect for the construction sector cannot be seen. 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. An exception forms the mean damage robustness test for the wholesale, retail trade, restaurants, and hotels sectors, where the coefficient turns slightly insignificant (\(p=0.12\)). Springer, New York, London, Toya H, Skidmore M (2007) Economic development and the impacts of natural disasters. Freddy has finally been declared over by the French Meteorological service. The South Pacific has recently been hit by particularly destructive cyclones like Winston and Pam. http://hdl.handle.net/10986/2512, Yang D (2008) Coping with disaster: the impact of hurricanes on international financial flows, 19702002. 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). The main causal identification stems from the occurrence of tropical cyclones, which are unpredictable in time and location (NHC 2016) and vary randomly within geographic regions (Dell etal. 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. Glossarydefinition of term: value added-gross. 2019). 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. Therefore, I include the mean level of temperature and precipitation as additional climate controls in a further specification. 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. The authors find that after the 2008 Wenchuan Earthquake neighboring counties suffer from indirect negative growth effects due to changes within the manufacturing sectors. The increase in tropical cyclone losses has led to concern that anthropogenic climate change is contributing to this trend. From a theoretical perspective, a natural disaster can have both positive and negative effects. 2019). 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. Cumulative lagged influence of tropical cyclone damage on sectoral GDP growth (20years). Moreover, I include time fixed effects \(\delta _t\) to account for time trends and other events common to all countries in the sample. Note that InputOutput coefficients can only range between 0 and 1. High levels of moisture in the air and low wind sheer formed showers and thunderstorms. However, one disadvantage of the EORA26 data set is that parts of the data are estimated and not measured. Notes This figure shows the significant effects of a one standard deviation increase in tropical cyclone damage on the respective InputOutput coefficient. Econ Syst Res 29(3):452461, Ouattara B, Strobl E (2013) The fiscal implications of hurricane strikes in the Caribbean. The error bars depict the 95% confidence intervals. J Econ Geogr 19(2):373408, Cuaresma JC, Hlouskova J, Obersteiner M (2008) Natural disasters as creative destruction? 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. In a single country study on floods in Germany, Sieg etal. Therefore, we can be sure that the reduced sample size does not drive the new results. 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. 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. Winds have lessened to 45 mph. 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. To quantify the destructiveness of tropical cyclones, I construct a new damage measure based on meteorological data weighted by different exposure of the sectors. 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. This hypothesis is supported by empirical findings for a positive GDP growth effect for Latin American countries (Albala-Bertrand 1993), for high-income countries (Cuaresma etal. 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. Sept. 16: Some areas receive as much as 34 inches of rain from Sept. 13 to Sept. 16. The underlying calculations for these numbers are as follows: agricultural damage: 91/1027 = 0.0886, population damage: 82/1035 = 0.0801. To view a copy of this licence, visit http://creativecommons.org/licenses/by/4.0/. Kunze, S. Unraveling the Effects of Tropical Cyclones on Economic Sectors Worldwide: Direct and Indirect Impacts. 2020). Asterisks and color intensities indicate p values according to: ***\(p<0.01\), **\(p<0.05\), *\(p<0.1\). World Dev 21(9):14171434, Angrist JD, Pischke J-S (2009) Mostly harmless econometrics: an empiricists companion. In the sample used, 70% of all grid-points are hit once by a tropical cyclone per year, whereas 20% are hit twice and 10% more than twice. Economic sectors most vulnerable to direct capital destruction of tropical cyclones must be identified. Possible mechanisms for this situation are, for example, additional capital flowssuch as remittances from relatives living abroad (Yang 2008)international aid (deMel etal. Given that producers in modern economies are . When water changes from a liquid to a gas, it absorbs heat, and when it changes from a gas to a liquid, it releases heat. I show point coefficient estimates as well as accumulated effects and error statistics calculated via a linear combination of the lagged \(\beta _{t-L}\) coefficients.Footnote 17. 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. Acemoglu D, Carvalho VM, Ozdaglar A, Tahbaz-Salehi A (2012) The network origins of aggregate fluctuations. (2012) only differentiate between three sectors: agriculture, manufacturing, and service. 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. 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 meteorological history of Hurricane Florence spanned 22 days from its inception on August 28, 2018, to its dissipation on September 18. 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. They are responsible for a demand shock in the mining and quarrying sectoral aggregate, leading to delayed negative growth effects being persistent over 10years. 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. The error term \(\epsilon _{i,t}\) is clustered at the country level. 6: The manufacturing sectors ask significantly less input from it. Pictured: The East Coast of the U.S. and the Gulf of Mexico viewed by satellite as Hurricane Florence made landfall on September 14. Natural Hazard-Induced Disasters and Production Efficiency: Moving Closer to or Further from the Frontier? Rev Econo Stat 101, Botzen WJW, Deschenes O, Sanders M (2019) The economic impacts of natural disasters: a review of models and empirical studies. 18. Tropical Cyclone Cheneso was a strong tropical cyclone that affected Madagascar in January 2023. This suggests that the production chains of the economy are only slightly disrupted by tropical storms, and indirect impacts are thus negligible. Correspondence to 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. \end{array}\right. } 2020), and, simultaneously, more people will be exposed to tropical cyclones. The underlying estimations can be found in Tables 1213 in Appendix A.5. Concurrently, the construction sector demands significantly more input (1.84%) from the agriculture, hunting, forestry, and fishing sector. 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 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. Additionally, within the agriculture, hunting, forestry, and fishing sectors, only the fishing sector experiences indirect negative effects. In total, I exclude five country-year observations from my analysis: Dominican Republic 1979, Grenada 2004, Montserrat 1989, Myanmar 1977, and Saint Lucia 1980. J Afr Econ 17(Supplement2):ii7ii49, Cole MA, Elliott RJR, Okubo T, Strobl E (2019) Natural disasters and spatial heterogeneity in damages: the birth, life and death of manufacturing plants. 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. In contrast to this, the no recovery hypothesis states that natural disasters can lead to a permanent decrease of the income level without the prospect of reaching the pre-disaster growth path again.Footnote 1 This could result from a situation where recovery measures are not effectively implemented or where various negative income effects accumulate over time (Hsiang and Jina 2014; Onuma etal. Since climatological impacts are most likely nonlinear, I also include squared precipitation and temperature in a further robustness test. 1315 show the cumulative results for different lag lengths (5, 10, 15), and Tables 1315 exhibit the underlying estimations. Alfred-Weber-Institute for Economics, Heidelberg University, Bergheimerstrasse 58, Heidelberg, 69115, Germany, You can also search for this author in Exposed countries are defined as having at least one positive damage observation over the sample period. 2632). This is a well-established method (Strobl 2012; Heinen etal. 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. It . 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? 2013), I control for the mean temperature and precipitation of a country in further specifications. (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. I also checked for different lag lengths, but could hardly find any effect above a lag length of five years. 2014). Originating from a tropical wave over West Africa, Florence quickly organized upon its emergence over the Atlantic Ocean. Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. 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. However, since agricultural areas are seldom highly populated, using a population-weighted damage function for the agricultural sectors would be biased. Cyclone Eloise. Slider with three articles shown per slide. At the same time, other sectors demand more from the manufacturing sectors, resulting in a zero aggregate negative effect for them. Tropical cyclones are immensely powerful and can travel up to speeds of 65 km/h. 5. 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 . https://unstats.un.org/unsd/snaama/Metadata/Glossary#, United Nations Statistical Division (2015b) Methodology for the national accounts main aggregates database. 2017). See the CLIMADA manual for furher details on the methods used https://github.com/davidnbresch/climada/blob/master/docs/climada_manual.pdf. 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. Wilmington remained cut off for at least a week following Hurricane Florence delaying the distribution of food, water and . First, as shown by Nickell (1981), there is a systematic bias of panel regressions with a lagged dependent variable and fixed effects. Tropical cyclones cause widespread damage in specific regions as a result of high winds and flooding. Additionally, tropical cyclone intensity is measured by remote sensing methods and other meteorological measurements. 2019), and the sector other activities (JP) comprises, among others, the financial sector. Their destructiveness has three sources: damaging winds, storm surges, and heavy rainfalls. For example, Loayza etal. How did the tropical cyclone Florence impact the following ? J Dev Econ 111:92106, Fetzer T (2020) Can workfare programs moderate conflict? Latent Heat and Its Impact on Tropical Cyclones. However, it has been demonstrated that this bias can be neglected if the panel is longer than 15 time periods (Dell etal. Therefore, they take 5-year averages of the number of affected people normalized by the total population as main explanatory variable. Nevertheless, it unveils the importance of the manufacturing sectors, as already demonstrated by their strong intersectoral connection in Fig. 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). [2] Between 1979 and 2017, there was a global increase in the proportion of tropical cyclones of Category 3 and higher on the Saffir-Simpson scale. 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. 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. 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. First, I only use the damage fraction due to maximum wind speed of tropical cyclones. World Dev 40(7):13171336, Mendelsohn R, Emanuel K, Chonabayashi S, Bakkensen L (2012) The impact of climate change on global tropical cyclone damage. 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. Driven by climate change, at least in some ocean basins (Elsner etal. 2013). Weather Clim Soc 3(4):261268, Felbermayr G, Grschl J (2014) Naturally negative: the growth effects of natural disasters. 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. A strong pressure gradient rapidly developed within the system as it headed west resulting in a category rating of 5 by 8 March. Some areas experience record rainfall with widespread flooding and predictions for it to get worse. J Econ Lit 52(3):740798, Dupor B (1999) Aggregation and irrelevance in multi-sector models. 912, while Tables 511 show the regression results. 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. J Atmos Ocean Technol 27(4):680692, Lazzaroni S, van Bergeijk P (2014) Natural disasters impact, factors of resilience and development: a meta-analysis of the macroeconomic literature. As climate change is warming ocean temperatures, there is potentially more of this fuel available. 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. 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 \({t-1}\). I also tested for lagged cumulative effects. Country-year observations above two standard deviations are labeled with the respective ISO3 code. It is based on a physical wind model and thereby overcomes criticism of report-based damage data. 2019). 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. Power cables and telephone lines come down, crops are ruined, and water and sewage supplies are affected. 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). Consequently, \(\beta ^j\) is the coefficient of main interest in this specification. 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. (Color figure online). 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. The purpose of this study is to advance our understanding of anthropogenic influences on tropical cyclones by quantifying the impact of climate change so far, and in the future, on the intensity . The analysis is conducted on a country-year level. Below is the link to the electronic supplementary material. Proc Natl Acad Sci USA 107(35):1536715372, Hsiang SM (2016) Climate econometrics. In: Bobrowsky PT (ed) Encyclopedia of natural hazards. The results of the InputOutput analysis, summarized in Appendix A.6.2, are a little less robust. It is not empirically clear how long past tropical cyclones influence present economic growth rates. Other basins have different names for the same phenomenon: tropical cyclone. 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. J Environ Econ Manag 98:102252, Elsner JB, Kossin JP, Jagger TH (2008) The increasing intensity of the strongest tropical cyclones. 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. Their destructiveness has three sources: damaging winds, storm surges, and heavy rainfalls. 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. 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). (2012) investigate the effect of natural disasters on three sectors (agriculture, manufacturing, service) in a global sample for the period 19612005. Such data are positively correlated with GDP (Felbermayr and Grschl 2014) and prone to measurement errors (Kousky 2014). Additionally, it is unexplained how the sectors are interconnected and if their structural dependence changes. The remainder of this paper is structured as follows: Sect. However, these growth rates are simply not high enough to reach the pre-disaster growth path. 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. Sept. 15: Florence is a 350-mile-wide tropical storm that is dumping massive amounts of rain throughout the Carolinas. This large negative effect is not surprising. 6. About how did tropical cyclone eloise impact the economy. 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. 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). PLoS ONE 14(4):121, Strobl E (2011) The economic growth impact of hurricanes: Evidence from U.S. coastal counties. Figure 6 demonstrates that three out of seven sectoral aggregates suffer from delayed negative impacts of tropical cyclones. However, little is known about the empirical InputOutput effects across broader sectors after a natural disaster shock. Together with further control variables, Table 2 in Appendix A.4 lists the exact definition of all variables used. 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. It has been shown that the damage of tropical cyclones increases non-linearly with wind speed and occurs only above a certain threshold. 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. Am Econ J Appl Econ 8(2):123153, Guha-Sapir D, CRED (2020) EM-DAT: the emergency events database. 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. 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 \(t-1\). Second and most importantly, I contribute to the literature on InputOutput analysis of natural disasters. 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. 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. Environ Resource Econ 78, 545569 (2021). 2012), insurance payments (Nguyen and Noy 2019), or government spending (Ouattara and Strobl 2013), which help the economy reach its pre-disaster income level. 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. These regions include East Asia and Pacific, Europe and Central Asia, Latin America and Caribbean, Middle East and North Africa, North America, South Asia, and Sub-Saharan Africa. 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. 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. After controlling for country and time specific effects, my estimation approaches allow for a causal identification of the direct and indirect responses to tropical cyclones damages with only little assumption needed (Dell etal. The analysis of the past influences of tropical cyclone damage demonstrates that the sectoral growth response following a tropical cyclone is a complex undertaking. The underlying tables are only included for the direct sectoral effects, while the robustness tables for the InputOutput analysis are available upon request. 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. J Appl Meteorol Climatol 55(4):9931007, Boehm CE, Flaaen A, Pandalai-Nayar N (2019) Input linkages and the transmission of shocks: firm-level evidence from the 2011 Tohoku earthquake.

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