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Natural disasters and establishment performance: Evidence from the 2011 Rio de Janeiro Landslides

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  • Alves, Pedro Jorge
  • Lima, Ricardo Carvalho de Andrade
  • Emanuel, Lucas

Abstract

This paper investigates the economic consequences of the 2011 Rio de Janeiro landslides, considered the worst weather-related natural disaster that occurred in Brazil. We evaluated the effect of the disaster on the business establishment performance and investigated the role of the main recovery policy designed for exposed business: the subsidized credit provided by the Brazilian Development Bank (BNDES). To define the affected establishments, we use georeferenced data of landslide points and calculate a simulated coverage radius of each specific point based on a prediction model of maximum run-out distance. Using a Difference-in-Differences approach, we show that establishments exposed to the disaster reacted to the unexpected shock by reducing the number of employees rather than closing their business or cutting the wages. Also, the establishments affected by the shock increased their probability of obtaining subsidized credit. This increase in subsidized credit was partially effective in mitigating the negative effects of the shock since it prevented the exposed companies from closing but did not revert the job losses.

Suggested Citation

  • Alves, Pedro Jorge & Lima, Ricardo Carvalho de Andrade & Emanuel, Lucas, 2022. "Natural disasters and establishment performance: Evidence from the 2011 Rio de Janeiro Landslides," Regional Science and Urban Economics, Elsevier, vol. 95(C).
    • Handle: RePEc:eee:regeco:v:95:y:2022:i:c:s0166046221001216
    DOI: 10.1016/j.regsciurbeco.2021.103761
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    More about this item

    Keywords

    Natural disasters; Landslides; Subsidized credit; Brazil;
    All these keywords.

    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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