Natural Disasters, Bilateral Exports and Foreign Consumers' Altruism

This paper highlights different channels through which natural disasters affect exports of agricultural products in developing countries, along different mechanisms arising from supply and demand. By using disaster variables (occurrence and intensity) from EM-DAT and GeoMet datasets with trade data at the 6 digit-HS level, our first estimates point to a non-robust relationship between disasters and agricultural exports from developing countries. We then argue that this non-statistical relationship hides two opposite effects: one supply effect negative on exports (i.e. reduction in capabilities of production); and a foreign demand effect (ie. altruism hypothesis), positive on exports. Using complementary data sources on a subset of products at hand, we could detect a supply effect. More interestingly, we were able to estimate a new demand effect across many alternative identifying variables, methods and controls. The detection of this positive effect, consistent with foreign consumers’ altruism, is new in the literature. It explains at least partly why disasters might not lead to very important falls in exports in developing countries.