IDEAS home Printed from https://ideas.repec.org/a/eee/jeeman/v118y2023ics0095069623000050.html
   My bibliography  Save this article

The regional economic impact of wildfires: Evidence from Southern Europe

Author

Listed:
  • Meier, Sarah
  • Elliott, Robert J.R.
  • Strobl, Eric

Abstract

We estimate the impact of wildfires on the growth rate of gross domestic product (GDP) and employment of regional economies in Southern Europe from 2011 to 2018. To this end we match Eurostat economic data with geospatial burned area perimeters based on satellite imagery for 233 Nomenclature of Territorial Units for Statistics (NUTS) 3 level regions in Portugal, Spain, Italy, and Greece. Our panel fixed effects instrumental variable estimation results suggest an average contemporary decrease in a region’s annual GDP growth rate of 0.11–0.18% conditional on having experienced at least one wildfire. For an average wildfire season this leads to a yearly production loss of 13–21 billion euros for Southern Europe. The impact on the employment growth rate is heterogeneous across economic activity types in that there is a decrease in the average annual employment growth rate for activities related to retail and tourism (e.g., transport, accommodation, food service activities) of 0.09–0.15%, offset by employment growth in insurance, real estate, administrative, and support service related activities of 0.13–0.22%.

Suggested Citation

  • 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).
    • Handle: RePEc:eee:jeeman:v:118:y:2023:i:c:s0095069623000050
    DOI: 10.1016/j.jeem.2023.102787
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0095069623000050
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jeem.2023.102787?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. 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.
    2. Jeffrey A. Groen & Mark J. Kutzbach & Anne E. Polivka, 2020. "Storms and Jobs: The Effect of Hurricanes on Individuals’ Employment and Earnings over the Long Term," Journal of Labor Economics, University of Chicago Press, vol. 38(3), pages 653-685.
    3. 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.
    4. Thomas Fomby & Yuki Ikeda & Norman V. Loayza, 2013. "The Growth Aftermath Of Natural Disasters," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 28(3), pages 412-434, April.
    5. Horwich, George, 2000. "Economic Lessons of the Kobe Earthquake," Economic Development and Cultural Change, University of Chicago Press, vol. 48(3), pages 521-542, April.
    6. Eric Strobl, 2011. "The Economic Growth Impact of Hurricanes: Evidence from U.S. Coastal Counties," The Review of Economics and Statistics, MIT Press, vol. 93(2), pages 575-589, May.
    7. Melania Michetti & Mehmet Pinar, 2019. "Forest Fires Across Italian Regions and Implications for Climate Change: A Panel Data Analysis," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 72(1), pages 207-246, January.
    8. Tatyana Deryugina, 2022. "Economic effects of natural disasters," IZA World of Labor, Institute of Labor Economics (IZA), pages 493-493, April.
    9. Simona Iammarino & Andrés Rodriguez-Pose & Michael Storper, 2019. "Regional inequality in Europe: evidence, theory and policy implications," Journal of Economic Geography, Oxford University Press, vol. 19(2), pages 273-298.
    10. Tatyana Deryugina & Laura Kawano & Steven Levitt, 2018. "The Economic Impact of Hurricane Katrina on Its Victims: Evidence from Individual Tax Returns," American Economic Journal: Applied Economics, American Economic Association, vol. 10(2), pages 202-233, April.
    11. Gellman, Jacob & Walls, Margaret & Wibbenmeyer, Matthew, 2022. "Wildfire, smoke, and outdoor recreation in the western United States," Forest Policy and Economics, Elsevier, vol. 134(C).
    12. Kochi, Ikuho & Champ, Patricia A. & Loomis, John B. & Donovan, Geoffrey H., 2012. "Valuing mortality impacts of smoke exposure from major southern California wildfires," Journal of Forest Economics, Elsevier, vol. 18(1), pages 61-75.
    13. Alessandro Barattieri & Patrice Borda & Alberto Brugnoli & Martino Pelli & Jeanne Tschopp, 2021. "The Short-Run, Dynamic Employment Effects of Natural Disasters: New Insights," Working Papers 21-06, Chair in macroeconomics and forecasting, University of Quebec in Montreal's School of Management.
    14. Stock, James H & Wright, Jonathan H & Yogo, Motohiro, 2002. "A Survey of Weak Instruments and Weak Identification in Generalized Method of Moments," Journal of Business & Economic Statistics, American Statistical Association, vol. 20(4), pages 518-529, October.
    15. Otrachshenko, Vladimir & Nunes, Luis C., 2022. "Fire takes no vacation: impact of fires on tourism," Environment and Development Economics, Cambridge University Press, vol. 27(1), pages 86-101, February.
    16. Loayza, Norman V. & Olaberría, Eduardo & Rigolini, Jamele & Christiaensen, Luc, 2012. "Natural Disasters and Growth: Going Beyond the Averages," World Development, Elsevier, vol. 40(7), pages 1317-1336.
    17. Richardson, Leslie A. & Champ, Patricia A. & Loomis, John B., 2012. "The hidden cost of wildfires: Economic valuation of health effects of wildfire smoke exposure in Southern California," Journal of Forest Economics, Elsevier, vol. 18(1), pages 14-35.
    18. W J Wouter Botzen & Olivier Deschenes & Mark Sanders, 2019. "The Economic Impacts of Natural Disasters: A Review of Models and Empirical Studies," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 13(2), pages 167-188.
    19. Sheldon, Tamara L. & Zhan, Crystal, 2022. "The impact of hurricanes and floods on domestic migration," Journal of Environmental Economics and Management, Elsevier, vol. 115(C).
    20. Jude Bayham & Jonathan K. Yoder & Patricia A. Champ & David E. Calkin, 2022. "The Economics of Wildfire in the United States," Annual Review of Resource Economics, Annual Reviews, vol. 14(1), pages 379-401, October.
    21. Barone, Guglielmo & Mocetti, Sauro, 2014. "Natural disasters, growth and institutions: A tale of two earthquakes," Journal of Urban Economics, Elsevier, vol. 84(C), pages 52-66.
    22. Felbermayr, Gabriel & Gröschl, Jasmin, 2014. "Naturally negative: The growth effects of natural disasters," Journal of Development Economics, Elsevier, vol. 111(C), pages 92-106.
    23. Damania, R. & Desbureaux, S. & Zaveri, E., 2020. "Does rainfall matter for economic growth? Evidence from global sub-national data (1990–2014)," Journal of Environmental Economics and Management, Elsevier, vol. 102(C).
    24. Patrick Baylis & Judson Boomhower, 2019. "Moral Hazard, Wildfires, and the Economic Incidence of Natural Disasters," NBER Working Papers 26550, National Bureau of Economic Research, Inc.
    25. Boustan, Leah Platt & Kahn, Matthew E. & Rhode, Paul W. & Yanguas, Maria Lucia, 2020. "The effect of natural disasters on economic activity in US counties: A century of data," Journal of Urban Economics, Elsevier, vol. 118(C).
    26. Spyros Skouras & Nicos Christodoulakis, 2014. "Electoral misgovernance cycles: evidence from wildfires and tax evasion in Greece," Public Choice, Springer, vol. 159(3), pages 533-559, June.
    27. Naguib, Costanza & Pelli, Martino & Poirier, David & Tschopp, Jeanne, 2022. "The impact of cyclones on local economic growth: Evidence from local projections," Economics Letters, Elsevier, vol. 220(C).
    28. McCoy, Shawn J. & Walsh, Randall P., 2018. "Wildfire risk, salience & housing demand," Journal of Environmental Economics and Management, Elsevier, vol. 91(C), pages 203-228.
    29. Kramer, H. Anu & Butsic, Van & Mockrin, Miranda H. & Ramirez-Reyes, Carlos & Alexandre, Patricia M. & Radeloff, Volker C., 2021. "Post-wildfire rebuilding and new development in California indicates minimal adaptation to fire risk," Land Use Policy, Elsevier, vol. 107(C).
    30. Marshall Burke & Anne Driscoll & Jenny Xue & Sam Heft-Neal & Jennifer Burney & Michael Wara, 2020. "The Changing Risk and Burden of Wildfire in the US," NBER Working Papers 27423, National Bureau of Economic Research, Inc.
    31. Rego, Francisco & Louro, Graça & Constantino, Luís, 2013. "The impact of changing wildfire regimes on wood availability from Portuguese forests," Forest Policy and Economics, Elsevier, vol. 29(C), pages 56-61.
    32. Jennifer Balch & Katherine Curtis & Jack DeWaard & Elizabeth Fussell & Kathryn McConnell & Kobie Price & Lise St. Denis & Stephan D. Whitaker, 2021. "Effects of Wildfire Destruction on Migration, Consumer Credit, and Financial Distress," Working Papers 21-29, Federal Reserve Bank of Cleveland.
    33. Yashobanta Parida & Swati Saini & Joyita Roy Chowdhury, 2021. "Economic growth in the aftermath of floods in Indian states," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 23(1), pages 535-561, January.
    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. Raphaelle G. Coulombe & Akhil Rao, 2023. "Fires and Local Labor Markets," Papers 2308.02739, arXiv.org.

    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. Ilan Noy & Eric Strobl, 2023. "Creatively Destructive Hurricanes: Do Disasters Spark Innovation?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 84(1), pages 1-17, January.
    2. Barattieri, Alessandro & Borda, Patrice & Brugnoli, Alberto & Pelli, Martino & Tschopp, Jeanne, 2023. "The short-run, dynamic employment effects of natural disasters: New insights from Puerto Rico," Ecological Economics, Elsevier, vol. 205(C).
    3. Pelli, Martino & Tschopp, Jeanne & Bezmaternykh, Natalia & Eklou, Kodjovi M., 2023. "In the eye of the storm: Firms and capital destruction in India," Journal of Urban Economics, Elsevier, vol. 134(C).
    4. Philippe Kabore & Nicholas Rivers & Catherine Deri Armstrong, 2023. "Natural disasters and economic performance: Evidence from the Slave Lake wildfire," Working Papers 2301E Classification-D14,, University of Ottawa, Department of Economics.
    5. 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.
    6. Justin Contat & Caroline Hopkins & Luis Mejia & Matthew Suandi, 2023. "When Climate Meets Real Estate: A Survey of the Literature," FHFA Staff Working Papers 23-05, Federal Housing Finance Agency.
    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. Kirchberger, Martina, 2017. "Natural disasters and labor markets," Journal of Development Economics, Elsevier, vol. 125(C), pages 40-58.
    9. Matthew A. Cole & Robert J R Elliott & Toshihiro Okubo & Eric Strobl, 2014. "Natural Disasters and the Birth, Life and Death of Plants: The Case of the Kobe Earthquake," Working Papers 2014-114, Department of Research, Ipag Business School.
    10. Emmanuel Apergis & Nicholas Apergis, 2021. "The impact of COVID-19 on economic growth: evidence from a Bayesian Panel Vector Autoregressive (BPVAR) model," Applied Economics, Taylor & Francis Journals, vol. 53(58), pages 6739-6751, December.
    11. Martina Kirchberger, 2014. "Natural Disasters and Labour Markets," Economics Series Working Papers WPS/2014-19, University of Oxford, Department of Economics.
    12. Eduardo Cavallo & Ilan Noy, 2009. "The Economics of Natural Disasters: A Survey," Research Department Publications 4649, Inter-American Development Bank, Research Department.
    13. Sven Kunze, 2021. "Unraveling the Effects of Tropical Cyclones on Economic Sectors Worldwide: Direct and Indirect Impacts," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 78(4), pages 545-569, April.
    14. Johar, Meliyanni & Johnston, David W. & Shields, Michael A. & Siminski, Peter & Stavrunova, Olena, 2022. "The economic impacts of direct natural disaster exposure," Journal of Economic Behavior & Organization, Elsevier, vol. 196(C), pages 26-39.
    15. Felbermayr, Gabriel & Gröschl, Jasmin, 2014. "Naturally negative: The growth effects of natural disasters," Journal of Development Economics, Elsevier, vol. 111(C), pages 92-106.
    16. Michael Berlemann & Max Steinhardt & Jascha Tutt, 2015. "Do Natural Disasters Stimulate Individual Saving? Evidence from a Natural Experiment in a Highly Developed Country," SOEPpapers on Multidisciplinary Panel Data Research 763, DIW Berlin, The German Socio-Economic Panel (SOEP).
    17. Marcel Henkel, Eunjee Kwon, Pierre Magontier, 2022. "The Unintended Consequences of Post-Disaster Policies for Spatial Sorting," Diskussionsschriften credresearchpaper37, Universitaet Bern, Departement Volkswirtschaft - CRED.
    18. Ihtisham A. Malik & Robert Faff, 2022. "Industry market reaction to natural disasters: do firm characteristics and disaster magnitude matter?," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 111(3), pages 2963-2994, April.
    19. Raphaelle G. Coulombe & Akhil Rao, 2023. "Fires and Local Labor Markets," Papers 2308.02739, arXiv.org.
    20. Akbulut-Yuksel, Mevlude & Rahman, Muhammad Habibur & Ulubaşoğlu, Mehmet Ali, 2023. "Silver lining of the water: The role of government relief assistance in disaster recovery," European Journal of Political Economy, Elsevier, vol. 79(C).

    More about this item

    Keywords

    GDP growth; Employment growth; Natural disasters; Wildfire;
    All these keywords.

    JEL classification:

    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics

    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:eee:jeeman:v:118:y:2023:i:c:s0095069623000050. 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: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/622870 .

    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.