how did the tropical cyclone impact the economy of florence

World Dev 21(9):14171434, Angrist JD, Pischke J-S (2009) Mostly harmless econometrics: an empiricists companion. Tropical cyclones are immensely powerful and can travel up to speeds of 65 km/h. Econometrica 49(6):14171426, Noy I (2009) The macroeconomic consequences of disasters. http://data.un.org/Explorer.aspx?d=SNAAMA, University of East Anglia Climatic Research Unit, Harris IC, Jones PD (2017) CRU TS4.01: climatic research unit (CRU) time-series (TS) version 4.01 of high-resolution gridded data of month-by-month variation in climate (Jan. 1901Dec. Together with further control variables, Table 2 in Appendix A.4 lists the exact definition of all variables used. So unfortunately, WA can expect regular cyclone impacts even as the climate . How did tropical cyclone Florence impact the economy? Tropical cyclones can have devastating economic consequences. In order to examine tropical cyclones as exogenous weather shocks, I pursue a panel data approach with year and country fixed effects in a simple growth equation framework (Strobl 2012; Dell etal. 2016). The InputOutput analysis demonstrates that production processes are only slightly disturbed by tropical cyclones. In contrast to Eq. How do tropical storms affect people and the environment? Direct negative impacts can result from the destruction of productive capital, infrastructure, or buildings, and thereby can generate a negative income shock for the whole economy (Kousky 2014). 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. Economic sectors most vulnerable to direct capital destruction of tropical cyclones must be identified. 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). This is an improvement in comparison to Hsiang (2010) who only focuses on 26 Caribbean countries, which are highly exposed but only account for 11% of global GDP in 2015 (United Nations Statistical Division 2015c). 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 19702015 period. Table 1 presents the results of the main specification for each of the seven annual sectoral GDP per capita growth rates. Cyclones can produce flooding in two ways. By doing so, I test the null-hypothesis of no effect of the damage variable. 6. In Sect. Ecol Econ 107:333346, Le Cozannet G, Modaressi H, Pedreros R, Garcin M, Krien Y, Desramaut N (2013) Storm surges. 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. Am Econ J Appl Econ 8(2):123153, Guha-Sapir D, CRED (2020) EM-DAT: the emergency events database. The impact of cyclones can be extremely devastating, both in terms of loss of life and damage to infrastructure. It is possible that the economy exhibits positive growth rates after a first negative growth shock. 0.1\(^{\circ }\) corresponds to approximately 10km at the equator. This importance for the sectoral composition was already demonstrated by Bulte etal. 2632). 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 \({t-1}\). 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. 2012, 2013). 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 ). How did the tropical cyclone impact the people communities? However, we still can learn from this analysis of how certain direct effects evolve. High levels of moisture in the air and low wind sheer formed showers and thunderstorms. In total, I extend this research area in three ways: First, I introduce a new objective damage measure that allows for sector specific exposure of tropical cyclones. Econometrica 55(3):703708, Newson R (1998) PARMEST: Stata module to create new data set with one observation per parameter of most recent model. For sectoral GDP effects, however, no such evidence exists so far. Based on a fine-gridded wind field model, I generate a new sector-specific damage measure weighted by either agricultural land use or population data. World Dev 105:231247, Bertinelli L, Strobl E (2013) Quantifying the local economic growth impact of hurricane strikes: an analysis from outer space for the Caribbean. This cost could climb higher as many rivers have yet to crest and may yet cause additional flooding. It comprises the logged per capita value added of the respective sector j to simulate a dynamic panel model, the population growth rate, a variable for openness (i.e., imports plus exports divided by GDP), and the growth rate of gross capital formation.Footnote 18 Including these socioeconomic control variables introduce some threats to causal inference. Hsiang (2010) also finds the largest negative effects of tropical cyclones for the agricultural sector aggregate, while Loayza etal. For large weather systems, the circulation pattern is in a counterclockwise direction in the Northern Hemisphere and a clockwise direction in the Southern Hemisphere. Direct impacts on commercial property and infrastructure can lead to production shortfalls. Econ Lett 94(1):2025, United Nations Statistical Division (2015a). Notes This figure shows the significant effects of a one standard deviation increase in tropical cyclone damage on the respective InputOutput coefficient. Bull Am Meteorol Soc 91(3):363376, Knutson T, Camargo SJ, Chan JC, Emanuel K, Ho C-H, Kossin J, Mohapatra M, Satoh M, Sugi M, Walsh K et al (2020) Tropical cyclones and climate change assessment: part II: projected response to anthropogenic warming. Older empirical studies suffer to a large extent from endogeneity problems in their econometric analysis because their damage data are based on reports and insurance data, such as the Emergency Events Database (EM-DAT). 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. 4 displays the average InputOutput coefficients for all countries for all available years (19902015). 5. 2019; Cole etal. Therefore, we can be sure that the reduced sample size does not drive the new results. Part of Springer Nature. Google Scholar, Albala-Bertrand J-M (1993) Natural disaster situations and growth: a macro-economic model for sudden disaster impacts. 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. Climate change will lead to fewer tropical cyclones overall. In general, a one standard deviation increase in tropical cyclone damage is associated with a decrease in the annual growth rate in the sector aggregate agriculture, hunting, forestry, and fishing of \(-\,2.62\) percentage points. Other basins have different names for the same phenomenon: tropical cyclone. 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. See the CLIMADA manual for furher details on the methods used https://github.com/davidnbresch/climada/blob/master/docs/climada_manual.pdf. Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. The number in parentheses compares the coefficients to the sample average of the respective InputOutput coefficient (in %). http://www.nhc.noaa.gov/verification/verify5.shtml, Nickell SJ (1981) Biases in dynamic models with fixed effects. My results indicate that this negative aggregate effect can be attributed to two sectoral aggregates, including agriculture, hunting, forestry, and fishing; manufacturing and wholesale, retail trade, restaurants, and hotels. How Tropical Cyclone Eloise Impacted the Economy 2008), and for a cross-section of 153 countries (Toya & Skidmore 2007). 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. The country fixed effects \(\theta _i\) control for unobservable time-invariant country-specific effects, such as culture, institutional background, and geographic location. Geosci Model Dev 12(7):30853097, Bacheler NN, Shertzer KW, Cheshire RT, MacMahan JH (2019) Tropical storms influence the movement behavior of a demersal oceanic fish species. Notes The colored areas depict all significant coefficients between the sectors, with negative coefficients in red and positive in green. These opposing production changes may be one of the reasons why we can see no aggregate direct cost effects. Ann Rev Resour Econ 8(1):4375, Hsiang SM, Jina AS (2014) The causal effect of environmental catastrophe on long-run economic growth: evidence from 6,700 cyclones. I am grateful for comments made by Axel Dreher, Vera Eichenauer, Andreas Fuchs, Lennart Kaplan, Eric Strobl, and Christina Vonnahme. The Effects of Cyclones on the Environment | Sciencing Pictured: The East Coast of the U.S. and the Gulf of Mexico viewed by satellite as Hurricane Florence made landfall on September 14. Econ Syst Res 29(3):452461, Ouattara B, Strobl E (2013) The fiscal implications of hurricane strikes in the Caribbean. To identify the causal effects of tropical cyclone intensity on sectoral per capita growth, I use the following set of regression equations, which constitutes my main specifications: where the dependent variable \(Growth_{i,t-1->t}^j\) is the annual value added per capita growth rate of sector j in country i. The impact of weather on economic growth and its production factors, Climate change and developing country growth: the cases of Malawi, Mozambique, and Zambia, A framework for assessing the economic impacts of Arctic change, https://github.com/davidnbresch/climada/blob/master/docs/climada_manual.pdf, https://www.munichre.com/en/solutions/for-industry-clients/natcatservice.html, https://ideas.repec.org/c/boc/bocode/s352601.html, http://www.nhc.noaa.gov/verification/verify5.shtml, https://unstats.un.org/unsd/snaama/Metadata/Glossary#, https://unstats.un.org/unsd/snaama/assets/pdf/methodology.pdf, http://data.un.org/Explorer.aspx?d=SNAAMA, http://creativecommons.org/licenses/by/4.0/. 4, I introduce a lagged dependent variable, since I suspect a strong path dependence of the InputOutput coefficient, i.e., most sectors plan their inputs at least one period ahead. 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. In light of this finding, one could question the reliability of the agricultural weighting scheme for the damage variable. Winds have lessened to 45 mph. Additionally, I allow for country-specific linear trends \(\mu _i*t\). Additionally, I cluster the standard errors at broader regional levels as a further robustness test. J Dev Econ 111:92106, Fetzer T (2020) Can workfare programs moderate conflict? Loayza etal. Moreover, for the vast majority of sectors, the indirect effects do not last longer than oneyear. Google Scholar, Auffhammer M, Hsiang SM, Schlenker W, Sobel A (2013) Using weather data and climate model output in economic analyses of climate change. 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. In subsequent years, tropical cyclones negatively affect the majority of all sectors. For both variables, I use the year-by-year variation calculated from the Climatic Research Unit (CRU) version 4.01, which is available at a resolution of approximately 50km since 1901 (University of East Anglia Climatic Research Unit et al. It . This suggests that the production chains of the economy are only slightly disrupted by tropical storms, and indirect impacts are thus negligible. 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. PDF 4.5: Economic Impacts of Tropical Cyclones - University of Colorado Boulder How do cyclones affect the people and communities? Check it out | how (2012) find no significant for the service sector.Footnote 21 Likely reason for this downturn could be less (domestic and international) touristic income for the restaurant and hotel sectors (Hsiang 2010; Lenzen etal. For tropical cyclones, no empirical cross-country study on indirect effects exists so far. The Aftermath of Hurricane Florence | AIR Worldwide Compared to the existing literature, the non-existing of a direct positive contemporaneous response of the construction sector is a new finding. Furthermore, I cluster the standard errors at broader regional levels to account for the event that tropical cyclones can also affect neighboring countries within one region.Footnote 31 Additionally, I control for the yearly tropical cyclone frequency per year, I test a different damage variable (mean instead of maximum cubed wind speed per year), and include tropical cyclone basin fixed-effects in further robustness tests. As the manufacturing sectors are responsible for much of the counterbalancing of indirect effects, they should not be forgotten by the policymakers, even though they show no direct negative effects. I follow Emanuel (2011) by including the cube of wind speed above a cut-off wind speed of 92 km/h. The new climate-economy literature. This does not mean that there have to exist a permanent negative growth effect for every period after the disaster. However, the InputOutput analysis shows that production processes are sticky and indirect economic effects are limited. Based on the InputOutput analysis, there are only a small number of significant sectoral shifts. 2012). Tropical cyclone | Definition, Causes, Formation, and Effects 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 change can be regarded as reconstruction efforts, which is also reflected in the relatively rapid recovery of the agricultural sector aggregate in Fig. Nature 455(7209):9295, Emanuel K (2011) Global warming effects on U.S. hurricane damage. 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. The cross-sectoral dependence is most pronounced for the manufacturing (D) and other activities (JP)sectoral aggregates. The images or other third party material in this article are included in the article's Creative Commons licence, unless indicated otherwise in a credit line to the material. This heat is the energy that is released or absorbed during a phase change in water. (2012) only differentiate between three sectors: agriculture, manufacturing, and service. 2014). They are responsible for a demand shock in the mining and quarrying sectoral aggregate, leading to delayed negative growth effects being persistent over 10years. https://doi.org/10.1007/s10640-021-00541-5, DOI: https://doi.org/10.1007/s10640-021-00541-5. The individual colors represent different wind speed intensities. How Tropical Cyclone Eloise Impacted the Environment 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). The wind speed drops with distance to the center of the hurricane and as soon as it makes landfall. 2015). J Infrastruct Syst 7(1):112, Hallegatte S, Przyluski V (2010) The economics of natural disasters: concepts and methods. Hurricane Florence - Wikipedia Provided by the Springer Nature SharedIt content-sharing initiative, Over 10 million scientific documents at your fingertips, Not logged in Ecol Econ 85:105115, Schreck CJ, Knapp KR, Kossin JP (2014) The impact of best track discrepancies on global tropical cyclone climatologies using IBTrACS. In response to this, numerous studies of databases1 from around the world have been undertaken to examine the factors responsible for this increase. Climate change impacted Hurricane Florence's precipitation and size 2015). 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. The storm will likely damage homes. 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. 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. Rev Environ Econ Policy 7(2):181198, Aznar-Siguan G, Bresch DN (2019) CLIMADA v1: a global weather and climate risk assessment platform. Bull Am Meteorol Soc 101(3):E303E322, Korty R (2013) Hurricane (typhoon, cyclone). The individual point estimates are shown in Figs. Eur Econ Rev 101:441458, Chhibber A, Laajaj R (2008) Disasters, climate change and economic development in Sub-Saharan Africa: lessons and directions. \(Damage_{i,t}\) is the derived damage function for country i at year t from Eq. One reason could be that the destruction of productive capital outweighs the higher number of orders. Tropical cyclones cause widespread damage in specific regions as a result of high winds and flooding. 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. 2008; Mendelsohn etal. Environ Sci Technol 46(15):83748381, Lenzen M, Moran D, Kanemoto K, Geschke A (2013) Building Eora: a global multi-region input-output database at high country and sector resolution. 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. If the official data of the countries or regions are not available, the UNSD consults additional data sources. Furthermore, I use a more specific damage function than Hsiang & Jina (2014) which takes account of different sectoral exposure. To view a copy of this licence, visit http://creativecommons.org/licenses/by/4.0/. 4. 2014). I also explore the effects on the 26 individual sectors later in this paper. During 5 February, a tropical low was located south of Bali, Indonesia. The remainder of this paper is structured as follows: Sect. Hurricane Florence Case Study - Internet Geography About 12 hours before Hurricane Florence makes an appearance, both of Duke Energy's North Carolina plants will shut down. Econ J 122(559):6491, Dell M, Jones BF, Olken BA (2014) What do we learn from the weather? 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.

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