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Do Natural Disasters Have Long-term Effects on Growth?

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  • Christian R. Jaramillo H.

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Abstract

Large natural disasters (LNDs) are ubiquitous phenomena with potentially large impacts on the infrastructure and population of countries and on their economic activity in general. Using a panel of 113 countries and 36 years of data, I examine the relationship between different measures of natural disaster impact and long-run economic growth. The sample is partitioned in two separate ways: according to the amount and type of disasters that countries have experienced and to the size of those disasters. For each partition, I present two sets of econometric estimations. The first regressions identify short-run and longer-lasting effects of LNDs. However, these first estimations do not distinguish between temporary but persistent effects and truly permanent ones. I thus estimate a structural model that allows me to identify permanent changes. The results of the first regressions show that for some of the groups of countries the disaster impact persists beyond the 2-5 years in which reconstruction and adaptation are expected to have an effect on the economy. However, the estimates using the structural model show that only for a very small number of countries which share a history of highly devastating natural disasters the negative effects are truly permanent.

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Bibliographic Info

Paper provided by UNIVERSIDAD DE LOS ANDES-CEDE in its series DOCUMENTOS CEDE with number 006647.

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Length: 44
Date of creation: 01 Nov 2009
Date of revision:
Handle: RePEc:col:000089:006647

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Keywords: Natural disasters; catastrophes; hurricanes; earthquakes; growth; panel data.;

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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Do Natural Disasters Have Long-term Effects on Growth?
    by Ariel Goldring in Free Market Mojo on 2010-02-16 06:40:52
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Cited by:
  1. Zeb Aurangzeb & Thanasis Stengos, 2012. "Economic Policies and the Impact of Natural Disasters on Economic Growth: A Threshold Regression Approach," Economics Bulletin, AccessEcon, vol. 32(1), pages 229-241.
  2. Ercio Muñoz S. & Alfredo Pistelli M., 2010. "¿Tienen los Terremotos un Impacto Inflacionario en el Corto Plazo? Evidencia para una Muestra de Países," Notas de Investigación Journal Economía Chilena (The Chilean Economy), Central Bank of Chile, vol. 13(2), pages 113-127, April.
  3. Eduardo Cavallo & Ilan Noy, 2010. "The Aftermath of Natural Disasters: Beyond Destruction," CESifo Forum, Ifo Institute for Economic Research at the University of Munich, vol. 11(2), pages 25-35, 07.
  4. Lazzaroni, S. & van Bergeijk, P.A.G., 2013. "Natural disasters impact, factors of resilience and development: A meta-analysis of the macroeconomic literature," ISS Working Papers - General Series 554, International Institute of Social Studies of Erasmus University Rotterdam (ISS), The Hague.
  5. Eduardo Cavallo & Ilan Noy, 2009. "The Economics of Natural Disasters: A Survey," Research Department Publications 4649, Inter-American Development Bank, Research Department.
  6. van Bergeijk, P.A.G. & Lazzaroni, S., 2013. "Macroeconomics of natural disasters," ISS Working Papers - General Series 50075, International Institute of Social Studies of Erasmus University Rotterdam (ISS), The Hague.
  7. Wenzel, Lars & Wolf, André, 2013. "Protection against major catastrophes: An economic perspective," HWWI Research Papers 137, Hamburg Institute of International Economics (HWWI).
  8. Hallegatte, Stephane, 2012. "Modeling the roles of heterogeneity, substitution, and inventories in the assessment of natural disaster economic costs," Policy Research Working Paper Series 6047, The World Bank.
  9. Geethanjali Selvaretnam & Kannika Thampanishvong & David Ulph, . "Saving and Re-building Lives: an Analysis of the Determinants of Disaster Relief," CRIEFF Discussion Papers 1202, Centre for Research into Industry, Enterprise, Finance and the Firm.
  10. Kousky, Carolyn, 2012. "Informing Climate Adaptation: A Review of the Economic Costs of Natural Disasters, Their Determinants, and Risk Reduction Options," Discussion Papers dp-12-28, Resources For the Future.

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