IDEAS home Printed from https://ideas.repec.org/p/ces/ceswps/_7031.html
   My bibliography  Save this paper

Measuring the Impact of Insurance on Urban Recovery with Light: The 2010-2011 New Zealand Earthquakes

Author

Listed:
  • Cuong Nguyen
  • Ilan Noy

Abstract

We measure the longer-term effect of a major earthquake on the local economy, using night-time light intensity measured from space, and investigate whether insurance claim payments for damaged residential property affected the local recovery process. We focus on the destructive Canterbury Earthquake Sequence (CES) 2010 -2011 as our case study. Uniquely for this event, more than 95% of residential housing units were covered by insurance, but insurance payments were staggered over 5 years, enabling us to identify their local impact. We find that night-time luminosity can capture the process of recovery and describe the recovery’s determinants. We also find that insurance payments contributed significantly to the process of economic recovery after the earthquake, but delayed payments were less affective and cash settlement of claims were more effective than insurance-managed repairs in contributing to local recovery.

Suggested Citation

  • Cuong Nguyen & Ilan Noy, 2018. "Measuring the Impact of Insurance on Urban Recovery with Light: The 2010-2011 New Zealand Earthquakes," CESifo Working Paper Series 7031, CESifo.
    • Handle: RePEc:ces:ceswps:_7031
    as

    Download full text from publisher

    File URL: https://www.cesifo.org/DocDL/cesifo1_wp7031.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Felbermayr, Gabriel & Gröschl, Jasmin, 2014. "Naturally negative: The growth effects of natural disasters," Journal of Development Economics, Elsevier, vol. 111(C), pages 92-106.
    2. Hodler, Roland & Raschky, Paul A., 2014. "Economic shocks and civil conflict at the regional level," Economics Letters, Elsevier, vol. 124(3), pages 530-533.
    3. Sutton, Paul C. & Costanza, Robert, 2002. "Global estimates of market and non-market values derived from nighttime satellite imagery, land cover, and ecosystem service valuation," Ecological Economics, Elsevier, vol. 41(3), pages 509-527, June.
    4. Alejandro Valle & Robert J. R. Elliott & Eric Strobl & Meng Tong, 2018. "The Short-Term Economic Impact of Tropical Cyclones: Satellite Evidence from Guangdong Province," Economics of Disasters and Climate Change, Springer, vol. 2(3), pages 225-235, October.
    5. Charles F. Manski, 1993. "Identification of Endogenous Social Effects: The Reflection Problem," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 60(3), pages 531-542.
    6. William duPont IV & Ilan Noy & Yoko Okuyama & Yasuyuki Sawada, 2015. "The Long-Run Socio-Economic Consequences of a Large Disaster: The 1995 Earthquake in Kobe," PLOS ONE, Public Library of Science, vol. 10(10), pages 1-17, October.
    7. Kelejian, Harry H. & Piras, Gianfranco, 2014. "Estimation of spatial models with endogenous weighting matrices, and an application to a demand model for cigarettes," Regional Science and Urban Economics, Elsevier, vol. 46(C), pages 140-149.
    8. William duPont IV & Ilan Noy & Yoko Okuyama & Yasuyuki Sawada, 2015. "The Long-Run Socio-Economic Consequences of a Large Disaster: The 1995 Earthquake in Kobe," PLOS ONE, Public Library of Science, vol. 10(10), pages 1-17, October.
    9. Patrick Sevestre & Laszlo Matyas, 2008. "The Econometrics of Panel Data," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00279977, HAL.
    10. Nguyen, Cuong & Noy, Ilan, 2017. "Insuring earthquakes: How would the Californian and Japanese insurance programs have fared down under (after the 2011 New Zealand earthquake)?," Working Paper Series 6416, Victoria University of Wellington, School of Economics and Finance.
    11. Frank Bickenbach & Eckhardt Bode & Peter Nunnenkamp & Mareike Söder, 2016. "Night lights and regional GDP," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 152(2), pages 425-447, May.
    12. Charlotta Mellander & José Lobo & Kevin Stolarick & Zara Matheson, 2015. "Night-Time Light Data: A Good Proxy Measure for Economic Activity?," PLOS ONE, Public Library of Science, vol. 10(10), pages 1-18, October.
    13. Adam Storeygard, 2016. "Farther on down the Road: Transport Costs, Trade and Urban Growth in Sub-Saharan Africa," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 83(3), pages 1263-1295.
    14. Yasuyuki Sawada & Satoshi Shimizutani, 2008. "How Do People Cope with Natural Disasters? Evidence from the Great Hanshin‐Awaji (Kobe) Earthquake in 1995," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 40(2‐3), pages 463-488, March.
    15. Besley, Timothy & Reynal-Querol, Marta, 2014. "The Legacy of Historical Conflict: Evidence from Africa," American Political Science Review, Cambridge University Press, vol. 108(2), pages 319-336, May.
    16. J. Vernon Henderson & Adam Storeygard & David N. Weil, 2012. "Measuring Economic Growth from Outer Space," American Economic Review, American Economic Association, vol. 102(2), pages 994-1028, April.
    17. Anna Bruederle & Roland Hodler, 2018. "Nighttime lights as a proxy for human development at the local level," PLOS ONE, Public Library of Science, vol. 13(9), pages 1-22, September.
    18. Martin Brown & Benjamin Guin & Karolin Kirschenmann, 2016. "Microfinance Banks and Financial Inclusion," Review of Finance, European Finance Association, vol. 20(3), pages 907-946.
    19. Kirby, Dustin K. & LeSage, James P., 2009. "Changes in commuting to work times over the 1990 to 2000 period," Regional Science and Urban Economics, Elsevier, vol. 39(4), pages 460-471, July.
    20. Porntida Poontirakul & Charlotte Brown & Erica Seville & John Vargo & Ilan Noy, 2017. "Insurance as a Double-Edged Sword: Quantitative Evidence from the 2011 Christchurch Earthquake," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 42(4), pages 609-632, October.
    21. Goetz von Peter & Sebastian von Dahlen & Sweta C Saxena, 2012. "Unmitigated disasters? New evidence on the macroeconomic cost of natural catastrophes," BIS Working Papers 394, Bank for International Settlements.
    22. Matthew E. Kahn, 2005. "The Death Toll from Natural Disasters: The Role of Income, Geography, and Institutions," The Review of Economics and Statistics, MIT Press, vol. 87(2), pages 271-284, May.
    23. Martin Melecky & Claudio Raddatz, 2015. "Fiscal Responses after Catastrophes and the Enabling Role of Financial Development," The World Bank Economic Review, World Bank, vol. 29(1), pages 129-149.
    24. Doll, Christopher N.H. & Muller, Jan-Peter & Morley, Jeremy G., 2006. "Mapping regional economic activity from night-time light satellite imagery," Ecological Economics, Elsevier, vol. 57(1), pages 75-92, April.
    25. Anselin, Luc & Bera, Anil K. & Florax, Raymond & Yoon, Mann J., 1996. "Simple diagnostic tests for spatial dependence," Regional Science and Urban Economics, Elsevier, vol. 26(1), pages 77-104, February.
    26. Federico Belotti & Gordon Hughes & Andrea Piano Mortari, 2017. "Spatial panel-data models using Stata," Stata Journal, StataCorp LP, vol. 17(1), pages 139-180, March.
    27. Elliott, Robert J.R. & Strobl, Eric & Sun, Puyang, 2015. "The local impact of typhoons on economic activity in China: A view from outer space," Journal of Urban Economics, Elsevier, vol. 88(C), pages 50-66.
    28. Toya, Hideki & Skidmore, Mark, 2007. "Economic development and the impacts of natural disasters," Economics Letters, Elsevier, vol. 94(1), pages 20-25, January.
    29. Solmaria Halleck Vega & J. Paul Elhorst, 2015. "The Slx Model," Journal of Regional Science, Wiley Blackwell, vol. 55(3), pages 339-363, June.
    30. Olivia, Susan & Gibson, John & Smith, Aaron D. & Rozelle, Scott & Deng, Xiangzheng, 2009. "An Empirical Evaluation of Poverty Mapping Methodology: Explicitly Spatial versus Implicitly Spatial Approach," 2009 Conference (53rd), February 11-13, 2009, Cairns, Australia 47651, Australian Agricultural and Resource Economics Society.
    31. László Mátyás & Patrick Sevestre (ed.), 2008. "The Econometrics of Panel Data," Advanced Studies in Theoretical and Applied Econometrics, Springer, number 978-3-540-75892-1, July-Dece.
    32. Christopher D. Elvidge & Daniel Ziskin & Kimberly E. Baugh & Benjamin T. Tuttle & Tilottama Ghosh & Dee W. Pack & Edward H. Erwin & Mikhail Zhizhin, 2009. "A Fifteen Year Record of Global Natural Gas Flaring Derived from Satellite Data," Energies, MDPI, vol. 2(3), pages 1-28, August.
    33. Roland Hodler & Paul A. Raschky, 2014. "Regional Favoritism," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 129(2), pages 995-1033.
    34. Lee, Lung-fei & Yu, Jihai, 2010. "Some recent developments in spatial panel data models," Regional Science and Urban Economics, Elsevier, vol. 40(5), pages 255-271, September.
    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. John Gibson & Susan Olivia & Geua Boe‐Gibson, 2020. "Night Lights In Economics: Sources And Uses," Journal of Economic Surveys, Wiley Blackwell, vol. 34(5), pages 955-980, December.
    2. Rio Yonson & Ilan Noy, 2020. "Disaster Risk Management Policies and the Measurement of Resilience for Philippine Regions," Risk Analysis, John Wiley & Sons, vol. 40(2), pages 254-275, February.

    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. Nguyen, Cuong & Noy, Ilan, 2018. "Measuring the impact of insurance on urban recovery with light: The 2011 New Zealand earthquake," Working Paper Series 6955, Victoria University of Wellington, School of Economics and Finance.
    2. Nguyen, Cuong & Noy, Ilan, 2018. "Measuring the impact of insurance on urban recovery with light: The 2011 New Zealand earthquake," Working Paper Series 20316, Victoria University of Wellington, School of Economics and Finance.
    3. Felbermayr, Gabriel & Gröschl, Jasmin & Sanders, Mark & Schippers, Vincent & Steinwachs, Thomas, 2022. "The economic impact of weather anomalies," World Development, Elsevier, vol. 151(C).
    4. Thomas Steinwachs, 2019. "Geography Matters: Spatial Dimensions of Trade, Migration and Growth," ifo Beiträge zur Wirtschaftsforschung, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 81.
    5. Felbermayr, Gabriel & Gröschl, Jasmin & Sanders, Mark & Schippers, Vincent & Steinwachs, Thomas, 2018. "Shedding Light on the Spatial Diffusion of Disasters," VfS Annual Conference 2018 (Freiburg, Breisgau): Digital Economy 181556, Verein für Socialpolitik / German Economic Association.
    6. Anna Bruederle & Roland Hodler, 2018. "Nighttime lights as a proxy for human development at the local level," PLOS ONE, Public Library of Science, vol. 13(9), pages 1-22, September.
    7. Shapiro, Daniel & Oh, Chang Hoon & Zhang, Peng, 2023. "Nighttime lights data and their implications for IB research," Journal of International Management, Elsevier, vol. 29(5).
    8. Juan Jose Miranda & Oscar A. Ishizawa & Hongrui Zhang, 2020. "Understanding the Impact Dynamics of Windstorms on Short-Term Economic Activity from Night Lights in Central America," Economics of Disasters and Climate Change, Springer, vol. 4(3), pages 657-698, October.
    9. Joseph, Iverson-Love, 2022. "The effect of natural disaster on economic growth: Evidence from a major earthquake in Haiti," World Development, Elsevier, vol. 159(C).
    10. John Gibson & Susan Olivia & Geua Boe‐Gibson, 2020. "Night Lights In Economics: Sources And Uses," Journal of Economic Surveys, Wiley Blackwell, vol. 34(5), pages 955-980, December.
    11. Kammerlander, Andreas & Schulze, Günther G., 2023. "Local economic growth and infant mortality," Journal of Health Economics, Elsevier, vol. 87(C).
    12. Jain, Chandan & Kashyap, Shagun & Lahoti, Rahul & Sahoo, Soham, 2023. "The impact of educated leaders on economic development: Evidence from India," Journal of Comparative Economics, Elsevier, vol. 51(3), pages 1068-1093.
    13. Lionel Roger, 2018. "Blinded by the light? Heterogeneity in the luminosity-growth nexus and the African growth miracle," Discussion Papers 2018-04, University of Nottingham, CREDIT.
    14. Patrick Lehnert & Michael Niederberger & Uschi Backes-Gellner & Eric Bettinger, 2020. "Proxying Economic Activity with Daytime Satellite Imagery: Filling Data Gaps Across Time and Space," Economics of Education Working Paper Series 0165, University of Zurich, Department of Business Administration (IBW), revised Sep 2022.
    15. Russ, Jason, 2020. "Water runoff and economic activity: The impact of water supply shocks on growth," Journal of Environmental Economics and Management, Elsevier, vol. 101(C).
    16. Ilari Määttä & Thomas Ferreira & Christian Leßmann, 2022. "Nighttime lights and wealth in very small areas: [Nachtlichter und Wohlstand in Kleinräumigen Daten:]," Review of Regional Research: Jahrbuch für Regionalwissenschaft, Springer;Gesellschaft für Regionalforschung (GfR), vol. 42(2), pages 161-190, August.
    17. Horvath, Roman, 2021. "Natural catastrophes and financial depth: An empirical analysis," Journal of Financial Stability, Elsevier, vol. 53(C).
    18. Roman Horvath, 2020. "Natural Catastrophes and Financial Development: An Empirical Analysis," Working Papers IES 2020/14, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised May 2020.
    19. Vinzenz Peters & Jingtian Wang & Mark Sanders, 2023. "Resilience to extreme weather events and local financial structure of prefecture-level cities in China," Climatic Change, Springer, vol. 176(9), pages 1-21, September.
    20. I. Koetsier, 2017. "The fiscal impact of natural disasters," Working Papers 17-17, Utrecht School of Economics.

    More about this item

    Keywords

    earthquake; recovery; disaster; insurance; light;
    All these keywords.

    JEL classification:

    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:ces:ceswps:_7031. 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: Klaus Wohlrabe (email available below). General contact details of provider: https://edirc.repec.org/data/cesifde.html .

    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.