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Innovation as Adaptation to Natural Disasters

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  • Hongxiu Li

    (Department of Economics, University of Waterloo)

Abstract

Can innovation be motivated by past natural disasters? Despite some recent research, the determinants of disaster-mitigating innovation are not well understood. Starting from a conceptual model combining perceived risk theory with the profit motive, this paper investigates the salience of innovation induced by natural disasters, using a unique dataset that includes U.S.patent data, and food, drought, and earthquake damage data for the years 1977 to 2005. To address the potential endogeneity of disaster damage, I employ the control function approach with instrumental variables constructed from disaster intensity measurements. The results show that impact-reducing innovations at the state level respond to national disaster damage in the U.S. In general, the impact of natural disasters is not localized to a state-that is, disaster damage in a state also stimulates innovations in more-distant states.The fndings in this paper highlight a policy role for the federal government in channelling and more effectively spurring impact-reducing innovations nationwide.

Suggested Citation

  • Hongxiu Li, 2017. "Innovation as Adaptation to Natural Disasters," Working Papers 1709, University of Waterloo, Department of Economics, revised Nov 2017.
    • Handle: RePEc:wat:wpaper:1709
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    2. Antoine Dechezlepretre & Sam Fankhauser & Matthieu Glachant & Jan Stoever & Simon Touboul, 2020. "Invention and Global Diffusion of Technologies for Climate Change Adaptation," World Bank Publications - Reports 33883, The World Bank Group.
    3. Zappa, William & Junginger, Martin & van den Broek, Machteld, 2019. "Is a 100% renewable European power system feasible by 2050?," Applied Energy, Elsevier, vol. 233, pages 1027-1050.

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    More about this item

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation

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