Q J Econ 131(3):15431592, Berlemann M, Wenzel D (2018) Hurricanes, economic growth and transmission channels: empirical evidence for countries on differing levels of development. Asterisks and color intensities indicate p values according to: ***\(p<0.01\), **\(p<0.05\), *\(p<0.1\). A strong pressure gradient rapidly developed within the system as it headed west resulting in a category rating of 5 by 8 March. Additionally, I allow for country-specific linear trends \(\mu _i*t\). 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. It is therefore important to examine their effects over time (Felbermayr and Grschl 2014; Hsiang and Jina 2014). Further details on the data on tropical cyclones can be found in Appendix A.1. This will provide further insights into whether production processes are seriously distorted by tropical cyclones. Moreover, for the vast majority of sectors, the indirect effects do not last longer than oneyear. 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. 2020), and, simultaneously, more people will be exposed to tropical cyclones. Table 1 presents the results of the main specification for each of the seven annual sectoral GDP per capita growth rates. The dynamic analysis reveals that past tropical cyclones have a negative influence on the majority of sectors providing evidence for the no recovery hypothesis discussed in the literature. Future weather. Upon examining the underlying estimates in Tables 1213 in Appendix A.5, it is evident that the transport, storage, communication sectoral aggregate also turns negative, at least at the 90% confidence interval.Footnote 23. 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. Direct impacts on commercial property and infrastructure can lead to production shortfalls. Econ Disasters Clim Change 4(3):657698, Mohan P (2017) Impact of hurricanes on agriculture: Evidence from the Caribbean. In: Bobrowsky PT (ed) Encyclopedia of natural hazards. 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. 2008), and for a cross-section of 153 countries (Toya & Skidmore 2007). While the importance of the fishing sector for indirect tropical cyclones effects is a novel finding, it does not mean that other agricultural sectors do not exhibit negative direct effects.Footnote 28. Table 21 in Appendix A.5 reveals that even with the smaller sample, all previously found effects can be identified again. 2019), and the sector other activities (JP) comprises, among others, the financial sector. Likewise, the contemporaneous, non-significant effect for the remaining sectors can be explained as a result of lower vulnerability and/or efficient recovery measures, which attenuate the potentially negative effect of tropical cyclones. In subsequent years, tropical cyclones negatively affect the majority of all sectors. 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). Even though, I thereby omit potential rainfall and storm surge damage, it is a common simplification in the literature (Hsiang 2010; Strobl 2011; Strobl 2012; Elliott etal. Nearly 2 million people have died globally due to tropical cyclones. Cyclone Cheneso. 2010).Footnote 4, To calculate a new aggregate and meaningful measure of tropical cyclone damage separated by economic sectors on a country-year level, I make use of the CLIMADA model developed by Aznar-Siguan and Bresch (2019) at a resolution of 0.1\(^{\circ }\).Footnote 5 The model employs the well-established Holland (1980) analytical wind field model to calculate spatially varying wind speed intensities around each raw data observation track.Footnote 6 The model is restricted to raw data wind speed intensities above 54 km/h and it interpolates the 6-h raw data observations from the IBTrACS data to hourly observations.Footnote 7. This heat is the energy that is released or absorbed during a phase change in water. Additionally, the GTAP database is not freely available and only covers a few years. The coefficients show the increase of the respective damage variable by one standard deviation. Notes InputOutput coefficients show how much input one sector needs to produce one unit of output. Kunze, S. Unraveling the Effects of Tropical Cyclones on Economic Sectors Worldwide: Direct and Indirect Impacts. Pictured: The East Coast of the U.S. and the Gulf of Mexico viewed by satellite as Hurricane Florence made landfall on September 14. 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. I further thank seminar participants at Heidelberg University (2016), the AERE Summer Conference in Breckenridge (6/2016), the EAERE Meeting in Zurich (06/2016), the BBQ Workshop in Salzburg (07/2016), the Geospatial Analysis of Disasters: Measuring Welfare Impacts of Emergency Relief Workshop in Heidelberg (07/2016), the Oeschger Climate Summer School in Grindelwald (08/2016), the Conference on Econometric Models of Climate Change in Oxford (9/2017), the Impacts World Conference in Potsdam (10/2017), and the 8th Annual Interdisciplinary Ph.D. Workshop in Sustainable Development at Columbia University (04/2018). Some areas experience record rainfall with widespread flooding and predictions for it to get worse. It . 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. For example, Loayza etal. 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. https://unstats.un.org/unsd/snaama/assets/pdf/methodology.pdf, United Nations Statistical Division (2015c) UN data. Their destructiveness has three sources: damaging winds, storm surges, and heavy rainfalls. Consequently, for each grid point g, a wind speed S is calculated depending on the maximum sustained wind speed (M), the forward speed (T), the distance (D) from the storm center, and the radius of the maximum wind (R)Footnote 8: As a result, I generate hourly wind fields for each of the 7814 tropical cyclones in my sample period (19702015).Footnote 9 Figure 1 illustrates the resulting modeled wind fields for Hurricane Ike in 2008 on its way to the U.S. coast. [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. To underline the credibility of my regression analyses, I test the sensitivity of my results in various ways. On average, the sector aggregates agriculture, hunting, forestry, and fishing (A&B) and mining and utilities (C&E) are only slightly dependent on other sectors, while there is a stronger dependence for the remaining sectoral aggregates. Additionally, I cluster the standard errors at broader regional levels as a further robustness test. 6, these positive demand shocks lead to a positive growth impulse in the construction sector. Details of How did the tropical cyclone eloise impact the environment? The results are particularly pressing, as tropical cyclones will continue to intensify due to global warming (Knutson etal. 2015). Based on the InputOutput analysis, there are only a small number of significant sectoral shifts. 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. http://www.nhc.noaa.gov/verification/verify5.shtml, Nickell SJ (1981) Biases in dynamic models with fixed effects. It is based on a physical wind model and thereby overcomes criticism of report-based damage data. The largest negative impacts can be attributed to the annual growth in the agriculture, hunting, forestry, and fishing sector aggregate, where a standard deviation increase in tropical cyclone damage is associated with a decrease of 262 percentage points of the annual sectoral growth rate. Globally they are among the most destructive natural hazards. 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. Tropical cyclones are large, cyclonically rotating wind systems that form over tropical or sub-tropical oceans and are mostly concentrated on months in summer or early autumn in both hemispheres (Korty 2013 ). 2012), insurance payments (Nguyen and Noy 2019), or government spending (Ouattara and Strobl 2013), which help the economy reach its pre-disaster income level. 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). Notes The y-axis displays the cumulative coefficient of tropical cyclone damage on the respective per capita growth rates, and the x-axis shows the years since the tropical cyclone passed. The error term \(\epsilon _{i,t}\) is clustered at the country level. In a single country study on floods in Germany, Sieg etal. 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. I also explore the effects on the 26 individual sectors later in this paper. J Infrastruct Syst 7(1):112, Hallegatte S, Przyluski V (2010) The economics of natural disasters: concepts and methods. The result offers a better understanding of the finding of Hsiang & Jina (2014), who show that tropical cyclones have long-lasting negative impacts on GDP growth by demonstrating which sectors are responsible for the long-lasting GDP downturn that they identify. J Econ Geogra 20(3):857877, NHC (2016) National hurricane center forecast verification. These factors are a decrease in the forward speed of a storm, increased intensity, and more water vapor in the atmosphere. Concurrently, the construction sector demands significantly more input (1.84%) from the agriculture, hunting, forestry, and fishing sector. Appendix A.5 presents further statistics: Figs. Tropical Cyclone Freddy - which is threatening communities in Madagascar and Mozambique for a second time in as many weeks - could become the longest-lasting storm of its kind on record, the World Meteorological Office (WMO) said on Tuesday. Correspondence to Additionally, it is unexplained how the sectors are interconnected and if their structural dependence changes. Environ Res Lett 13(7):074034. The storm currently has a maximum sustained wind speed of 25 mph and is located 105 miles west-northwest of New York City at the time of publication, as reported by CBS News. Cyclones also can bring torrential rains that lead to flooding. It has been shown that the damage of tropical cyclones increases non-linearly with wind speed and occurs only above a certain threshold. 2014). From 1980 to 2018 tropical cyclones were responsible for nearly half of all natural disaster losses worldwide, with damage amounting to an aggregate of USD 2111 billion (Munich Re 2018). Climate change will lead to fewer tropical cyclones overall. 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%). Freddy has finally been declared over by the French Meteorological service. The sectoral GDP data originates from the United Nations Statistical Division (UNSD) (United Nations Statistical Division 2015b). In contrast, for the agricultural sector, it would be misleading to take a nighttime light or a population weight, since these areas have a rather low population density. While some studies provide evidence of only a short-term economic impact of tropical cyclones (Bertinelli and Strobl 2013; Elliott etal. 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. 2632). 2018; Elliott etal. Gross value added is defined by the UNSD as the value of output less the value of intermediate consumption (United Nations Statistical Division 2015a). To underpin the causal identification, I conduct a falsification test, where I introduce leads instead of lags of the Damage variable, as well as a Fisher randomization test. Additionally, within the agriculture, hunting, forestry, and fishing sectors, only the fishing sector experiences indirect negative effects. J Appl Meteorol Climatol 52(8):16881697, Blanc E, Strobl E (2016) Assessing the impact of typhoons on rice production in the Philippines. 5. For the sector aggregate wholesale, retail trade, restaurants, and hotels, a one standard deviation increase in tropical cyclone damage cause a decrease of \(-\,1.16\) percentage points of the annual per capita growth rate. Ecol Econ 85:105115, Schreck CJ, Knapp KR, Kossin JP (2014) The impact of best track discrepancies on global tropical cyclone climatologies using IBTrACS. They are responsible for a demand shock in the mining and quarrying sectoral aggregate, leading to delayed negative growth effects being persistent over 10years. 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. In general, this analysis reveals production scheme transformations that can result from both supply and demand changes of the sectors due to tropical cyclones. While there exists a lot of theoretical work on the importance of cross-sectional linkages in consequence of a shock (see e.g., Dupor 1999; Horvath 2000; Acemoglu etal. Rev Environ Econ Policy 13(2):167188, Bulte E, Xu L, Zhang X (2018) Post-disaster aid and development of the manufacturing sector: lessons from a natural experiment in China. Am Econ J Appl Econ 8(2):123153, Guha-Sapir D, CRED (2020) EM-DAT: the emergency events database. Tropical cyclones only lead to a small number of production process changes with coefficients being relatively small. 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. Effects of tropical cyclone damage on sectoral GDP growth compared to sample average. Sept. 15: Florence is a 350-mile-wide tropical storm that is dumping massive amounts of rain throughout the Carolinas. The agricultural sector relies heavily on environmental conditions as most of its production facilities lie outside of buildings and are hence more vulnerable to the destructiveness of tropical cyclones. Figure 8 reveals some patterns that are not visible on the aggregate level. \(Damage_{i,t}\) is the derived damage function for country i at year t from Eq. Figure 6 demonstrates that three out of seven sectoral aggregates suffer from delayed negative impacts of tropical cyclones. The underlying calculations for these numbers are as follows: agricultural damage: 91/1027 = 0.0886, population damage: 82/1035 = 0.0801. How did the tropical cyclone impact the people communities? Environ Resource Econ 78, 545569 (2021). 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. 4 displays the average InputOutput coefficients for all countries for all available years (19902015). 2019). eSwatini also experienced rainfall.. How did the tropical cyclone impact the people communities? Notes This figure shows the significant effects of a one standard deviation increase in tropical cyclone damage on the respective InputOutput coefficient. The manufacturing sectors use significantly less input from itself, which is not shown in Fig. Hsiang (2010) also finds the largest negative effects of tropical cyclones for the agricultural sector aggregate, while Loayza etal. Additionally, it seems that the fishing sector is responsible for the negative supply shock in the agriculture, hunting, forestry, and fishing sector aggregate. The gray shaded area specifies the respective 95% confidence bands, and the red line depicts the connected estimates. Possible reasons for these indirect effects, could be changes in fishing patterns in response to tropical cyclones (Bacheler etal. Additionally, a new damage measure is developed that considers the varying levels of exposure of different sectors. Furthermore, a shortage in the labor force can lead to a wage increase, which can serve as an incentive for workers from other regions to migrate to the affected region, also leading to a positive effect (Hallegatte and Przyluski 2010). 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. To the best of my knowledge, this is the first paper that analyzes global sectoral interactions after the occurrence of a tropical cyclone. 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. Econ J 122(559):6491, Dell M, Jones BF, Olken BA (2014) What do we learn from the weather? A damage function that takes into account only the exposed population would underestimate the damage caused to the agricultural sector, given the large unpopulated but agriculturally used areas in the north and west of Australia. 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. To deal with this problem, I will re-estimate my regression models with Newey and West (1987) as well as spatial HAC standard errors (Hsiang 2010; Fetzer 2020), which allow for a temporal correlation of 10years and a spatial correlation of 1000 kilometer radius.Footnote 20. Figure 8 also offers an explanation for the downturn of the mining and utilities (C&E) sector aggregate after some years, as shown in Fig. 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. 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. The coefficients range between zero and one. What are 3 impacts of tropical cyclones? In the second test, I take the mean wind speed cubed \((S(mean)^3_{g,t})\) above 92 km/h per grid and year to calculate the \(damage_{i,t}\) (see Appendix Table 41 and Figs. Furthermore, I use a more specific damage function than Hsiang & Jina (2014) which takes account of different sectoral exposure. The wind speed drops with distance to the center of the hurricane and as soon as it makes landfall. 4.2 demonstrates, this effect may be driven by less demand from the manufacturing sectors. This paper contributes to two strands of the literature. Given these positive demand effects, one may ask why a significant contemporaneous positive direct effect for the construction sector cannot be seen. 2019). (Color figure online). How do tropical storms affect people and the environment? It remains unclear if there exists some key sector, which, if damaged, results in a negative shock for the other sectors. Wilmington remained cut off for at least a week following Hurricane Florence delaying the distribution of food, water and . Tropical cyclones can have devastating economic consequences. I take advantage of the International Best Track Archive for Climate Stewardship (IBTrACS) provided by the National Oceanic and Atmospheric Administration (Knapp etal. Acemoglu D, Carvalho VM, Ozdaglar A, Tahbaz-Salehi A (2012) The network origins of aggregate fluctuations. 2632). Panel (a) displays the percentage of agricultural land, whereas (b) shows the distribution of population in Australia in 2008. 18. (2018). 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. As climate change is warming ocean temperatures, there is potentially more of this fuel available. Stata J 17(3):630651, Holland GJ (1980) An analytic model of the wind and pressure profiles in hurricanes. Cyclones can produce flooding in two ways. Despite having the largest negative shock, destroyed capital is relatively quickly replaced. One major effort of this paper is to generate a new meaningful sectoral damage variable on a country-year level. 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. In Sect. 0.1\(^{\circ }\) corresponds to approximately 10km at the equator. In this respect, the results of this research can also be used to calculate the future costs of climate change. Perhaps the most challenging task is to identify critical sectors that may be responsible for widespread spillover effects leading to substantial modifications in other sectors production input schemes.
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