IDEAS home Printed from https://ideas.repec.org/a/spr/envpol/v25y2023i4d10.1007_s10018-023-00369-x.html
   My bibliography  Save this article

Impact of extratropical cyclones, floods, and wildfires on firms’ financial performance in New Zealand

Author

Listed:
  • Apurba Roy

    (Victoria University of Wellington
    University of Barishal)

  • Ilan Noy

    (Victoria University of Wellington)

Abstract

The purpose of the research is to empirically investigate the impact of extratropical cyclones, floods, and wildfires on the profitability of firms operating in New Zealand. We utilize a comprehensive administrative database of all firms from Statistics New Zealand’s Longitudinal Business Database from the financial year 2011–2020 for extratropical cyclones and 2001–2020 for floods and wildfires. A set of panel regressions with the firm- and time-fixed effects has been estimated to assess the impact of extratropical cyclones, floods, and wildfires on firms’ profit and business equity. We find that the annual profit of extratropical cyclones-affected firms in agriculture, wholesale trade, financial and insurance services, and transportation sectors decreased significantly compared with the unaffected firms in the cyclone year. The study findings also indicate that floods had no significant effect on the firm’s profit, and wildfires had no significant impact on the forestry firms’ profit. Besides, we found no substantial evidence of the impact of extratropical cyclones, floods, and wildfires on the firms’ business equity.

Suggested Citation

  • Apurba Roy & Ilan Noy, 2023. "Impact of extratropical cyclones, floods, and wildfires on firms’ financial performance in New Zealand," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 25(4), pages 493-574, October.
    • Handle: RePEc:spr:envpol:v:25:y:2023:i:4:d:10.1007_s10018-023-00369-x
    DOI: 10.1007/s10018-023-00369-x
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s10018-023-00369-x
    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/s10018-023-00369-x?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. Hiroki Yamamoto & Tomomi Naka, 2021. "Quantitative Analysis of the Impact of Floods on Firms' Financial Conditions," Bank of Japan Working Paper Series 21-E-10, Bank of Japan.
    2. Xi Hu & Raghav Pant & Jim W. Hall & Swenja Surminski & Jiashun Huang, 2019. "Multi-Scale Assessment of the Economic Impacts of Flooding: Evidence from Firm to Macro-Level Analysis in the Chinese Manufacturing Sector," Sustainability, MDPI, vol. 11(7), pages 1-18, April.
    3. Nielsen-Pincus, Max & Moseley, Cassandra & Gebert, Krista, 2014. "Job growth and loss across sectors and time in the western US: The impact of large wildfires," Forest Policy and Economics, Elsevier, vol. 38(C), pages 199-206.
    4. Noth, Felix & Rehbein, Oliver, 2019. "Badly hurt? Natural disasters and direct firm effects," Finance Research Letters, Elsevier, vol. 28(C), pages 254-258.
    5. Meltzer, Rachel & Ellen, Ingrid Gould & Li, Xiaodi, 2021. "Localized commercial effects from natural disasters: The case of Hurricane Sandy and New York City," Regional Science and Urban Economics, Elsevier, vol. 86(C).
    6. 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.
    7. Andrea Leiter & Harald Oberhofer & Paul Raschky, 2009. "Creative Disasters? Flooding Effects on Capital, Labour and Productivity Within European Firms," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 43(3), pages 333-350, July.
    8. Hu, Xi & Pant, Raghav & Hall, Jim W. & Surminski, Swenja & Huang, Jiashun, 2019. "Multi-scale assessment of the economic impacts of flooding: evidence from firm to macro-level analysis in the Chinese manufacturing sector," LSE Research Online Documents on Economics 100534, London School of Economics and Political Science, LSE Library.
    9. Quan Sun & John Mann & Mark Skidmore, 2022. "The Impacts of Flooding and Business Activity and Employment: A Spatial Perspective on Small Business," Water Economics and Policy (WEP), World Scientific Publishing Co. Pte. Ltd., vol. 8(03), pages 1-22, July.
    10. Daoping Wang & Dabo Guan & Shupeng Zhu & Michael Mac Kinnon & Guannan Geng & Qiang Zhang & Heran Zheng & Tianyang Lei & Shuai Shao & Peng Gong & Steven J. Davis, 2021. "Economic footprint of California wildfires in 2018," Nature Sustainability, Nature, vol. 4(3), pages 252-260, March.
    11. Agustín Indaco & Francesc Ortega & Süleyman Taṣpınar, 2021. "Hurricanes, flood risk and the economic adaptation of businesses," Journal of Economic Geography, Oxford University Press, vol. 21(4), pages 557-591.
    12. Yuanwei Qin & Xiangming Xiao & Jinwei Dong & Yao Zhang & Xiaocui Wu & Yosio Shimabukuro & Egidio Arai & Chandrashekhar Biradar & Jie Wang & Zhenhua Zou & Fang Liu & Zheng Shi & Russell Doughty & Berri, 2019. "Improved estimates of forest cover and loss in the Brazilian Amazon in 2000–2017," Nature Sustainability, Nature, vol. 2(8), pages 764-772, August.
    13. Daiju Narita & Richard Tol & David Anthoff, 2010. "Economic costs of extratropical storms under climate change: an application of FUND," Journal of Environmental Planning and Management, Taylor & Francis Journals, vol. 53(3), pages 371-384.
    14. Sihan Li & Friederike E. L. Otto, 2022. "The role of human-induced climate change in heavy rainfall events such as the one associated with Typhoon Hagibis," Climatic Change, Springer, vol. 172(1), pages 1-19, May.
    15. Josiah Hickson & Joseph Marshan, 2022. "Labour Market Effects of Bushfires and Floods in Australia: A Gendered Perspective," The Economic Record, The Economic Society of Australia, vol. 98(S1), pages 1-23, September.
    16. Benjamin H. Strauss & Philip M. Orton & Klaus Bittermann & Maya K. Buchanan & Daniel M. Gilford & Robert E. Kopp & Scott Kulp & Chris Massey & Hans de Moel & Sergey Vinogradov, 2021. "Economic damages from Hurricane Sandy attributable to sea level rise caused by anthropogenic climate change," Nature Communications, Nature, vol. 12(1), pages 1-9, December.
    17. Yui-Yip Lau & Tsz-Leung Yip & Maxim A. Dulebenets & Yuk-Ming Tang & Tomoya Kawasaki, 2022. "A Review of Historical Changes of Tropical and Extra-Tropical Cyclones: A Comparative Analysis of the United States, Europe, and Asia," IJERPH, MDPI, vol. 19(8), pages 1-19, April.
    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. Yu, Weihua & Hu, Jingjing & Deng, Chenchen, 2024. "Overflowing waters, diluted investments: The enduring impact of historical Yellow River floods on enterprise fixed assets investments," Journal of Asian Economics, Elsevier, vol. 92(C).

    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. Hayato Kato & Toshihiro Okubo, 2022. "The Resilience of FDI to Natural Disasters Through Industrial Linkages," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 82(1), pages 177-225, May.
    2. Meltzer, Rachel & Ellen, Ingrid Gould & Li, Xiaodi, 2021. "Localized commercial effects from natural disasters: The case of Hurricane Sandy and New York City," Regional Science and Urban Economics, Elsevier, vol. 86(C).
    3. Yu, Weihua & Hu, Jingjing & Deng, Chenchen, 2024. "Overflowing waters, diluted investments: The enduring impact of historical Yellow River floods on enterprise fixed assets investments," Journal of Asian Economics, Elsevier, vol. 92(C).
    4. Felbermayr, Gabriel & Gröschl, Jasmin, 2014. "Naturally negative: The growth effects of natural disasters," Journal of Development Economics, Elsevier, vol. 111(C), pages 92-106.
    5. Lulu Huang & Qiannan Liu, 2024. "The Impact of Natural Disasters on Corporate ESG Performance: Evidence from China," Sustainability, MDPI, vol. 16(12), pages 1-14, June.
    6. Tetsuji Okazaki & Toshihiro Okubo & Eric Strobl, 2020. "The Bright and Dark Side of Financial Support from Local and Central Banks after a Natural Disaster: Evidence from the Great Kanto Earthquake, 1923 Japan," Keio-IES Discussion Paper Series 2020-001, Institute for Economics Studies, Keio University.
    7. Matthew Ranson & Lisa Tarquinio & Audrey Lew, 2016. "Modeling the Impact of Climate Change on Extreme Weather Losses," NCEE Working Paper Series 201602, National Center for Environmental Economics, U.S. Environmental Protection Agency, revised May 2016.
    8. Mathews, Shilpita & Surminski, Swenja & Roezer, Viktor, 2021. "The risk of corporate lock-in to future physical climate risks: the case of flood risk in England and Wales," LSE Research Online Documents on Economics 112801, London School of Economics and Political Science, LSE Library.
    9. Adachi, Daisuke & Nakata, Hiroyuki & Sawada, Yasuyuki & Sekiguchi, Kunio, 2023. "Adverse selection and moral hazard in corporate insurance markets: Evidence from the 2011 Thailand floods," Journal of Economic Behavior & Organization, Elsevier, vol. 205(C), pages 376-386.
    10. Jasmin Katrin Gröschl, 2013. "Gravity Model Applications and Macroeconomic Perspectives," ifo Beiträge zur Wirtschaftsforschung, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 48, May.
    11. Alves, Pedro Jorge & Lima, Ricardo Carvalho de Andrade & Emanuel, Lucas, 2022. "Natural disasters and establishment performance: Evidence from the 2011 Rio de Janeiro Landslides," Regional Science and Urban Economics, Elsevier, vol. 95(C).
    12. Apurba, Roy & Ilan, Noy & Harold E., Cuffe, 2021. "Income and Extratropical Cyclones in New Zealand," Working Paper Series 21117, Victoria University of Wellington, School of Economics and Finance.
    13. Hiroki Yamamoto & Tomomi Naka, 2021. "Quantitative Analysis of the Impact of Floods on Firms' Financial Conditions," Bank of Japan Working Paper Series 21-E-10, Bank of Japan.
    14. Xue Jin & U. Rashid Sumaila & Kedong Yin, 2020. "Direct and Indirect Loss Evaluation of Storm Surge Disaster Based on Static and Dynamic Input-Output Models," Sustainability, MDPI, vol. 12(18), pages 1-25, September.
    15. Mathews, Shilpita & Surminski, Swenja & Roezer, Viktor, 2021. "The risk of corporate lock-in to future physical climate risks: the case of flood risk in England and Wales," LSE Research Online Documents on Economics 112807, London School of Economics and Political Science, LSE Library.
    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. Walls, Margaret A. & Wibbenmeyer, Matthew, 2023. "How Local are the Local Economic Impacts of Wildfires?," RFF Working Paper Series 23-03, Resources for the Future.
    18. Kousky, Carolyn, 2012. "Informing Climate Adaptation: A Review of the Economic Costs of Natural Disasters, Their Determinants, and Risk Reduction Options," RFF Working Paper Series dp-12-28, Resources for the Future.
    19. Meier, Sarah & Elliott, Robert J.R. & Strobl, Eric, 2023. "The regional economic impact of wildfires: Evidence from Southern Europe," Journal of Environmental Economics and Management, Elsevier, vol. 118(C).
    20. Sultana Zeenat Fouzia & Jianhong Mu & Yong Chen, 2020. "Local labour market impacts of climate-related disasters: a demand-and-supply analysis," Spatial Economic Analysis, Taylor & Francis Journals, vol. 15(3), pages 336-352, July.

    More about this item

    Keywords

    Extratropical cyclones; Floods; Wildfires; Firms; Profit; Financial performance; New Zealand;
    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

    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:spr:envpol:v:25:y:2023:i:4:d:10.1007_s10018-023-00369-x. 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.