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The effects of hazard risk information on locations of firms by industry in tsunami-prone coastal areas

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  • Kono, Tatsuhito
  • Tatano, Hirokazu
  • Ushiki, Kenji
  • Nakazono, Daisuke
  • Sugisawa, Fumihito

Abstract

The construction of seawalls changes the risk of tsunami inundation and the locations of firms behind the seawalls. In order to estimate the benefits of seawalls and to design land use planning behind seawalls, it is necessary to know the impact of risk reduction on the location of firms. To capture such impacts, we estimate the effects of changes in tsunami inundation risk information on the number of firms behind the seawalls. The data is from Japanese areas with a high possibility of a tsunami. There are regional fixed effects by industry and spatial heterogeneities in risks due to the topographic conditions. We first rigorously derive a fixed-effects model in uncertain situations with expected profits of firms, and theoretically find that, unlike in situations of certainty, we should factor in the interaction between regional fixed effects and the change in risks besides the usual regional fixed effects. Our empirical estimation finds that awareness of a high inundation risk has a negative impact on industries with demand in a wide range of areas, such as manufacturing and wholesale, but no impact on industries with localized demand, such as education and clinics.

Suggested Citation

  • Kono, Tatsuhito & Tatano, Hirokazu & Ushiki, Kenji & Nakazono, Daisuke & Sugisawa, Fumihito, 2022. "The effects of hazard risk information on locations of firms by industry in tsunami-prone coastal areas," MPRA Paper 115412, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:115412
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    References listed on IDEAS

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    More about this item

    Keywords

    Difference-in-differences; Relocation of firms; Tsunami hazard map;
    All these keywords.

    JEL classification:

    • R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics
    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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