IDEAS home Printed from https://ideas.repec.org/a/kap/enreec/v78y2021i4d10.1007_s10640-021-00541-5.html
   My bibliography  Save this article

Unraveling the Effects of Tropical Cyclones on Economic Sectors Worldwide: Direct and Indirect Impacts

Author

Listed:
  • Sven Kunze

    (Heidelberg University)

Abstract

This paper examines the current, lagged, and indirect effects of tropical cyclones on annual sectoral growth worldwide. 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 1970–2015 period. I find a significantly negative influence of tropical cyclones on two sector aggregates including agriculture, as well as trade and tourism. In subsequent years, tropical cyclones negatively affect the majority of all sectors. However, the Input–Output analysis shows that production processes are sticky and indirect economic effects are limited.

Suggested Citation

  • Sven Kunze, 2021. "Unraveling the Effects of Tropical Cyclones on Economic Sectors Worldwide: Direct and Indirect Impacts," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 78(4), pages 545-569, April.
    • Handle: RePEc:kap:enreec:v:78:y:2021:i:4:d:10.1007_s10640-021-00541-5
    DOI: 10.1007/s10640-021-00541-5
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s10640-021-00541-5
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s10640-021-00541-5?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Mendelsohn, Robert & Emanuel, Kerry & Chonabayashi, Shun, 2011. "The impact of climate change on global tropical storm damages," Policy Research Working Paper Series 5562, The World Bank.
    2. Stéphane Hallegatte & Valentin Przyluski, 2010. "The Economics of Natural Disasters," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 11(02), pages 14-24, July.
    3. Andréas Heinen & Jeetendra Khadan & Eric Strobl, 2019. "The Price Impact of Extreme Weather in Developing Countries," The Economic Journal, Royal Economic Society, vol. 129(619), pages 1327-1342.
    4. Noy, Ilan, 2009. "The macroeconomic consequences of disasters," Journal of Development Economics, Elsevier, vol. 88(2), pages 221-231, March.
    5. Eric Strobl, 2011. "The Economic Growth Impact of Hurricanes: Evidence from U.S. Coastal Counties," The Review of Economics and Statistics, MIT Press, vol. 93(2), pages 575-589, May.
    6. World Bank & United Nations, 2010. "Natural Hazards, UnNatural Disasters : The Economics of Effective Prevention," World Bank Publications - Books, The World Bank Group, number 2512.
    7. Johanna Forster & Peter Schuhmann & Iain Lake & Andrew Watkinson & Jennifer Gill, 2012. "The influence of hurricane risk on tourist destination choice in the Caribbean," Climatic Change, Springer, vol. 114(3), pages 745-768, October.
    8. Jean-Noël Barrot & Julien Sauvagnat, 2016. "Input Specificity and the Propagation of Idiosyncratic Shocks in Production Networks," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 131(3), pages 1543-1592.
    9. Elodie Blanc & Eric Strobl, 2016. "Assessing the Impact of Typhoons on Rice Production in the Philippines," Post-Print hal-01446210, HAL.
    10. Joshua D. Angrist & Jörn-Steffen Pischke, 2009. "Mostly Harmless Econometrics: An Empiricist's Companion," Economics Books, Princeton University Press, edition 1, number 8769.
    11. Thiemo Fetzer, 2020. "Can Workfare Programs Moderate Conflict? Evidence from India," Journal of the European Economic Association, European Economic Association, vol. 18(6), pages 3337-3375.
    12. Toya, Hideki & Skidmore, Mark, 2007. "Economic development and the impacts of natural disasters," Economics Letters, Elsevier, vol. 94(1), pages 20-25, January.
    13. Loayza, Norman V. & Olaberría, Eduardo & Rigolini, Jamele & Christiaensen, Luc, 2012. "Natural Disasters and Growth: Going Beyond the Averages," World Development, Elsevier, vol. 40(7), pages 1317-1336.
    14. Lazzaroni, Sara & van Bergeijk, Peter A.G., 2014. "Natural disasters' impact, factors of resilience and development: A meta-analysis of the macroeconomic literature," Ecological Economics, Elsevier, vol. 107(C), pages 333-346.
    15. Simon Heß, 2017. "Randomization inference with Stata: A guide and software," Stata Journal, StataCorp LP, vol. 17(3), pages 630-651, September.
    16. W J Wouter Botzen & Olivier Deschenes & Mark Sanders, 2019. "The Economic Impacts of Natural Disasters: A Review of Models and Empirical Studies," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 13(2), pages 167-188.
    17. Yang Dean, 2008. "Coping with Disaster: The Impact of Hurricanes on International Financial Flows, 1970-2002," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 8(1), pages 1-45, June.
    18. Berlemann, Michael & Wenzel, Daniela, 2018. "Hurricanes, economic growth and transmission channels," World Development, Elsevier, vol. 105(C), pages 231-247.
    19. Felbermayr, Gabriel & Gröschl, Jasmin, 2014. "Naturally negative: The growth effects of natural disasters," Journal of Development Economics, Elsevier, vol. 111(C), pages 92-106.
    20. Melissa Dell & Benjamin F. Jones & Benjamin A. Olken, 2014. "What Do We Learn from the Weather? The New Climate-Economy Literature," Journal of Economic Literature, American Economic Association, vol. 52(3), pages 740-798, September.
    21. Strobl, Eric, 2012. "The economic growth impact of natural disasters in developing countries: Evidence from hurricane strikes in the Central American and Caribbean regions," Journal of Development Economics, Elsevier, vol. 97(1), pages 130-141.
    22. Bulte, Erwin & Xu, Lihe & Zhang, Xiaobo, 2018. "Post-disaster aid and development of the manufacturing sector: Lessons from a natural experiment in China," European Economic Review, Elsevier, vol. 101(C), pages 441-458.
    23. Millner, Antony & McDermott, Thomas K. J., 2016. "Model confirmation in climate economics," LSE Research Online Documents on Economics 67122, London School of Economics and Political Science, LSE Library.
    24. Jesús Crespo Cuaresma & Jaroslava Hlouskova & Michael Obersteiner, 2008. "Natural Disasters As Creative Destruction? Evidence From Developing Countries," Economic Inquiry, Western Economic Association International, vol. 46(2), pages 214-226, April.
    25. Robert Mendelsohn & Kerry Emanuel & Shun Chonabayashi & Laura Bakkensen, 2012. "The impact of climate change on global tropical cyclone damage," Nature Climate Change, Nature, vol. 2(3), pages 205-209, March.
    26. Christoph E. Boehm & Aaron Flaaen & Nitya Pandalai-Nayar, 2019. "Input Linkages and the Transmission of Shocks: Firm-Level Evidence from the 2011 Tōhoku Earthquake," The Review of Economics and Statistics, MIT Press, vol. 101(1), pages 60-75, March.
    27. Tobias Sieg & Thomas Schinko & Kristin Vogel & Reinhard Mechler & Bruno Merz & Heidi Kreibich, 2019. "Integrated assessment of short-term direct and indirect economic flood impacts including uncertainty quantification," PLOS ONE, Public Library of Science, vol. 14(4), pages 1-21, April.
    28. Newey, Whitney & West, Kenneth, 2014. "A simple, positive semi-definite, heteroscedasticity and autocorrelation consistent covariance matrix," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 33(1), pages 125-132.
    29. Dupor, Bill, 1999. "Aggregation and irrelevance in multi-sector models," Journal of Monetary Economics, Elsevier, vol. 43(2), pages 391-409, April.
    30. Solomon M. Hsiang & Amir S. Jina, 2014. "The Causal Effect of Environmental Catastrophe on Long-Run Economic Growth: Evidence From 6,700 Cyclones," NBER Working Papers 20352, National Bureau of Economic Research, Inc.
    31. Burke, M. & Craxton, M. & Kolstad, C.D. & Onda, C. & Allcott, H. & Baker, E. & Barrage, L. & Carson, R. & Gillingham, K. & Graff-Zivin, J. & Greenstone, M. & Hallegatte, S. & Hanemann, W.M. & Heal, G., 2016. "Opportunities for advances in climate change economics," ISU General Staff Papers 3565, Iowa State University, Department of Economics.
    32. Ouattara, Bazoumana & Strobl, Eric, 2013. "The fiscal implications of hurricane strikes in the Caribbean," Ecological Economics, Elsevier, vol. 85(C), pages 105-115.
    33. Hallegatte, Stephane & Przyluski, Valentin, 2010. "The economics of natural disasters : concepts and methods," Policy Research Working Paper Series 5507, The World Bank.
    34. Samuel Fankhauser & Nicholas Stern, 2016. "Climate change, development, poverty and economics," GRI Working Papers 253, Grantham Research Institute on Climate Change and the Environment.
    35. Matthew A Cole & Robert J R Elliott & Toshihiro Okubo & Eric Strobl, 2019. "Natural disasters and spatial heterogeneity in damages: the birth, life and death of manufacturing plants," Journal of Economic Geography, Oxford University Press, vol. 19(2), pages 373-408.
    36. Suresh De Mel & David McKenzie & Christopher Woodruff, 2012. "Enterprise Recovery Following Natural Disasters," Economic Journal, Royal Economic Society, vol. 122(559), pages 64-91, March.
    37. Thiemo Fetzer, 0. "Can Workfare Programs Moderate Conflict? Evidence from India," Journal of the European Economic Association, European Economic Association, vol. 18(6), pages 3337-3375.
    38. Elliott, Robert J.R. & Liu, Yi & Strobl, Eric & Tong, Meng, 2019. "Estimating the direct and indirect impact of typhoons on plant performance: Evidence from Chinese manufacturers," Journal of Environmental Economics and Management, Elsevier, vol. 98(C).
    39. Daron Acemoglu & Vasco M. Carvalho & Asuman Ozdaglar & Alireza Tahbaz‐Salehi, 2012. "The Network Origins of Aggregate Fluctuations," Econometrica, Econometric Society, vol. 80(5), pages 1977-2016, September.
    40. James B. Elsner & James P. Kossin & Thomas H. Jagger, 2008. "The increasing intensity of the strongest tropical cyclones," Nature, Nature, vol. 455(7209), pages 92-95, September.
    41. Juan Jose Miranda & Oscar A. Ishizawa & Hongrui Zhang, 2020. "Understanding the Impact Dynamics of Windstorms on Short-Term Economic Activity from Night Lights in Central America," Economics of Disasters and Climate Change, Springer, vol. 4(3), pages 657-698, October.
    42. Ajay Chhibber & Rachid Laajaj, 0. "Disasters, Climate Change and Economic Development in Sub-Saharan Africa: Lessons and Directions," Journal of African Economies, Centre for the Study of African Economies, vol. 17(suppl_2), pages -49.
    43. Elliott, Robert J.R. & Strobl, Eric & Sun, Puyang, 2015. "The local impact of typhoons on economic activity in China: A view from outer space," Journal of Urban Economics, Elsevier, vol. 88(C), pages 50-66.
    44. Albala-Bertrand, J. M., 1993. "Natural disaster situations and growth: A macroeconomic model for sudden disaster impacts," World Development, Elsevier, vol. 21(9), pages 1417-1434, September.
    45. André Gröger & Yanos Zylberberg, 2016. "Internal Labor Migration as a Shock Coping Strategy: Evidence from a Typhoon," American Economic Journal: Applied Economics, American Economic Association, vol. 8(2), pages 123-153, April.
    46. Maximilian Auffhammer & Solomon M. Hsiang & Wolfram Schlenker & Adam Sobel, 2013. "Using Weather Data and Climate Model Output in Economic Analyses of Climate Change," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 7(2), pages 181-198, July.
    47. Solomon Hsiang, 2016. "Climate Econometrics," Annual Review of Resource Economics, Annual Reviews, vol. 8(1), pages 43-75, October.
    48. Jan Oosterhaven, 2017. "On the limited usability of the inoperability IO model," Economic Systems Research, Taylor & Francis Journals, vol. 29(3), pages 452-461, July.
    49. Nickell, Stephen J, 1981. "Biases in Dynamic Models with Fixed Effects," Econometrica, Econometric Society, vol. 49(6), pages 1417-1426, November.
    50. Manfred Lenzen & Daniel Moran & Keiichiro Kanemoto & Arne Geschke, 2013. "Building Eora: A Global Multi-Region Input-Output Database At High Country And Sector Resolution," Economic Systems Research, Taylor & Francis Journals, vol. 25(1), pages 20-49, March.
    51. Kousky, Carolyn, 2014. "Informing climate adaptation: A review of the economic costs of natural disasters," Energy Economics, Elsevier, vol. 46(C), pages 576-592.
    52. Burke, M & Craxton, M & Kolstad, CD & Onda, C & Allcott, H & Baker, E & Barrage, L & Carson, R & Gillingham, K & Graf-Zivin, J & Greenstone, M & Hallegatte, S & Hanemann, WM & Heal, G & Hsiang, S & Jo, 2016. "Opportunities for advances in climate change economics," University of California at Santa Barbara, Recent Works in Economics qt4tc5d9pb, Department of Economics, UC Santa Barbara.
    53. Horvath, Michael, 2000. "Sectoral shocks and aggregate fluctuations," Journal of Monetary Economics, Elsevier, vol. 45(1), pages 69-106, February.
    54. Solomon M. Hsiang, 2016. "Climate Econometrics," NBER Working Papers 22181, National Bureau of Economic Research, Inc.
    55. Nazrul Islam, 1995. "Growth Empirics: A Panel Data Approach," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 110(4), pages 1127-1170.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Barattieri, Alessandro & Borda, Patrice & Brugnoli, Alberto & Pelli, Martino & Tschopp, Jeanne, 2023. "The short-run, dynamic employment effects of natural disasters: New insights from Puerto Rico," Ecological Economics, Elsevier, vol. 205(C).
    2. Robert Reinhardt, 2022. "Shaking up Foreign Finance: FDI in a Post-Disaster World," Post-Print halshs-03908250, HAL.
    3. Veronica Leoni & David Boto-García, 2023. "The Effect of Natural Disasters on Hotel Demand, Supply and Labour Markets: Evidence from the La Palma Volcano Eruption," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 86(4), pages 755-780, December.
    4. Robert Reinhardt, 2022. "Shaking up Foreign Finance: FDI in a Post-Disaster World," Documents de travail du Centre d'Economie de la Sorbonne 22024, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    5. Kulanthaivelu, Eric, 2023. "The impact of tropical cyclones on income inequality in the U.S.: An empirical analysis," Ecological Economics, Elsevier, vol. 209(C).
    6. Robert Reinhardt, 2022. "Shaking up Foreign Finance: FDI in a Post-Disaster World," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-03908250, HAL.
    7. Robert Reinhardt, 2022. "Shaking up Foreign Finance: FDI in a Post-Disaster World," Working Papers halshs-03908250, HAL.
    8. Stephan Schneider & Sven Kunze, 2021. "Disastrous Discretion: Ambiguous Decision Situations Foster Political Favoritism," KOF Working papers 21-491, KOF Swiss Economic Institute, ETH Zurich.
    9. Jessie Ruth Schleypen & Charlotte Plinke & Tobias Geiger, 2024. "The Impacts of Multiple Tropical Cyclone Events and Associated Precipitation on Household Income and Expenditures," Economics of Disasters and Climate Change, Springer, vol. 8(2), pages 197-233, July.
    10. A. Amasarao & P. Sunitha & S. R. Rao & K. Chandra sekhar & B. Mmame, 2024. "Role of surface and sub-surface ocean parameters on cyclonic storms over Arabian Sea in the recent decades," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 120(13), pages 11969-11985, October.
    11. Dino Collalti, 2024. "The Economic Dynamics After a Flood: Evidence from Satellite Data," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 87(9), pages 2401-2428, September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kunze, Sven, 2020. "Unraveling the effects of tropical cyclones on economic sectors worldwide," Working Papers 0685, University of Heidelberg, Department of Economics.
    2. Kunze, Sven, 2018. "Unraveling the effects of tropical cyclones on economic sectors worldwide," Working Papers 0653, University of Heidelberg, Department of Economics.
    3. Kunze, Sven, 2017. "Unraveling the Effects of Tropical Cyclones on Economic Sectors Worldwide," Working Papers 0641, University of Heidelberg, Department of Economics.
    4. Matteo Coronese & Davide Luzzati, 2022. "Economic impacts of natural hazards and complexity science: a critical review," LEM Papers Series 2022/13, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    5. Susana Ferreira, 2024. "Extreme Weather Events and Climate Change: Economic Impacts and Adaptation Policies," Annual Review of Resource Economics, Annual Reviews, vol. 16(1), pages 207-231, October.
    6. Jasmin Gröschl & Alexander Sandkamp, 2023. "Flood Events and Plant Level Trade: A Chinese Experience," ifo Working Paper Series 389, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    7. Lazzaroni, Sara & van Bergeijk, Peter A.G., 2014. "Natural disasters' impact, factors of resilience and development: A meta-analysis of the macroeconomic literature," Ecological Economics, Elsevier, vol. 107(C), pages 333-346.
    8. Elliott, Robert J.R. & Liu, Yi & Strobl, Eric & Tong, Meng, 2019. "Estimating the direct and indirect impact of typhoons on plant performance: Evidence from Chinese manufacturers," Journal of Environmental Economics and Management, Elsevier, vol. 98(C).
    9. Fujin Zhou & Wouter Botzen, 2021. "Firm Level Evidence of Disaster Impacts on Growth in Vietnam," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 79(2), pages 277-322, June.
    10. Chaitat Jirophat & Pym Manopimoke & Suparit Suwanik, 2022. "The Macroeconomic Effects of Climate Shocks in Thailand," PIER Discussion Papers 188, Puey Ungphakorn Institute for Economic Research.
    11. Xiao-Chen Yuan & Xun Sun, 2019. "Climate change impacts on socioeconomic damages from weather-related events in China," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 99(3), pages 1197-1213, December.
    12. Felbermayr, Gabriel & Gröschl, Jasmin, 2014. "Naturally negative: The growth effects of natural disasters," Journal of Development Economics, Elsevier, vol. 111(C), pages 92-106.
    13. Bhaskar Jyoti Neog, 2022. "Temperature shocks and rural labour markets: evidence from India," Climatic Change, Springer, vol. 171(1), pages 1-20, March.
    14. Johanna Choumert-Nkolo & Anaïs Lamour & Pascale Phélinas, 2021. "The Economics of Volcanoes," Economics of Disasters and Climate Change, Springer, vol. 5(2), pages 277-299, July.
    15. Toshihiro Okubo & Eric Strobl, 2021. "Natural disasters, firm survival, and growth: Evidence from the Ise Bay Typhoon, Japan," Journal of Regional Science, Wiley Blackwell, vol. 61(5), pages 944-970, November.
    16. Vinzenz Peters & Jingtian Wang & Mark Sanders, 2023. "Resilience to extreme weather events and local financial structure of prefecture-level cities in China," Climatic Change, Springer, vol. 176(9), pages 1-21, September.
    17. Berlemann, Michael & Wenzel, Daniela, 2018. "Hurricanes, economic growth and transmission channels," World Development, Elsevier, vol. 105(C), pages 231-247.
    18. Huang, Lulu & Liu, Qiannan & Tang, Yugang, 2024. "Long-term economic impact of disasters: Evidence from multiple earthquakes in China," World Development, Elsevier, vol. 174(C).
    19. Pelli, Martino & Tschopp, Jeanne & Bezmaternykh, Natalia & Eklou, Kodjovi M., 2023. "In the eye of the storm: Firms and capital destruction in India," Journal of Urban Economics, Elsevier, vol. 134(C).
    20. Hiroki Onuma & Kong Joo Shin & Shunsuke Managi, 2021. "Short-, Medium-, and Long-Term Growth Impacts of Catastrophic and Non-catastrophic Natural Disasters," Economics of Disasters and Climate Change, Springer, vol. 5(1), pages 53-70, April.

    More about this item

    Keywords

    Natural disasters; Climate impact analysis; Sectoral GDP growth; Tropical cyclones; Input–output analysis;
    All these keywords.

    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:enreec:v:78:y:2021:i:4:d:10.1007_s10640-021-00541-5. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.