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Hurricane Iniki: measuring the long-term economic impact of a natural disaster using synthetic control

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  • Coffman, Makena
  • Noy, Ilan

Abstract

The long-term impacts of disasters are ‘hidden’ as it becomes increasingly difficult over time to attribute them to a singular event. We use a synthetic control methodology, formalized in Abadie, A. et al. (2010), Synthetic control methods for comparative case studies: estimating the effect of California's tobacco control program, Journal of the American Statistical Association 105 (490): 493–505, to estimate the long-term impacts of a 1992 hurricane on the Hawaiian island of Kauai. Hurricane Iniki, the strongest storm to hit Hawaii in many years, wrought an estimated US$ 7.4 billion (2008) in direct damages. Since the unaffected Hawaiian Islands provide a control group, the case of Iniki is uniquely suited to provide insight into the long-term impact of natural disasters. We show that Kauai's economy has yet to recover, 18 years after this event. We estimate the island's current population to be 12 per cent smaller than it would have been had the hurricane not occurred. Similarly, aggregate personal income and the number of private sector jobs are proportionally lower.

Suggested Citation

  • Coffman, Makena & Noy, Ilan, 2012. "Hurricane Iniki: measuring the long-term economic impact of a natural disaster using synthetic control," Environment and Development Economics, Cambridge University Press, vol. 17(02), pages 187-205, April.
  • Handle: RePEc:cup:endeec:v:17:y:2012:i:02:p:187-205_00
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    Cited by:

    1. du Pont IV, William & Okuyama, Yoko & Noy, Ilan & Sawada, Yasuyuki, 2015. "The long-run socio-economic consequences of a large disaster: The 1995 earthquake in Kobe," Working Paper Series 4197, Victoria University of Wellington, School of Economics and Finance.
    2. Kurosaki, Takashi, 2012. "Household-level Recovery after Floods in a Developing Country: Evidence from Pakistan," CEI Working Paper Series 2012-08, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
    3. Hayakawa, Kazunobu & Matsuura, Toshiyuki & Okubo, Fumihiro, 2015. "Firm-level impacts of natural disasters on production networks: Evidence from a flood in Thailand," Journal of the Japanese and International Economies, Elsevier, vol. 38(C), pages 244-259.
    4. Adriana Kocornik-Mina & Thomas K.J. McDermott & Guy Michaels & Ferdinand Rauch, 2015. "Flooded cities," GRI Working Papers 221, Grantham Research Institute on Climate Change and the Environment.
    5. Ilan Noy & Christopher Edmonds, 2016. "The Economic and Fiscal Burdens of Disasters in the Pacific," CESifo Working Paper Series 6237, CESifo Group Munich.
    6. Noy, Ilan & Karim, Azreen, 2013. "Poverty, inequality and natural disasters – A survey," Working Paper Series 2974, Victoria University of Wellington, School of Economics and Finance.
    7. Kurosaki, Takashi, 2017. "Household-Level Recovery after Floods in a Tribal and Conflict-Ridden Society," World Development, Elsevier, vol. 94(C), pages 51-63.
    8. Jianhong E. Mu & Yong Chen, 2016. "Impacts of large natural disasters on regional income," 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. 83(3), pages 1485-1503, September.
    9. Mohan, Preeya, 2017. "The economic impact of hurricanes on bananas: A case study of Dominica using synthetic control methods," Food Policy, Elsevier, vol. 68(C), pages 21-30.
    10. Lynham, John & Noy, Ilan & Page, Jonathan, 2017. "The 1960 Tsunami in Hawaii: Long-Term Consequences of a Coastal Disaster," World Development, Elsevier, vol. 94(C), pages 106-118.
    11. Xiaodong Gong & Maheshwar Rao, 2014. "‘The Economic Impact of Prolonged Political Instability: A Case Study of Fiji’," NATSEM Working Paper Series 14/26, University of Canberra, National Centre for Social and Economic Modelling.
    12. Lisa Doyle & Ilan Noy, 2015. "The short-run nationwide macroeconomic effects of the Canterbury earthquakes," New Zealand Economic Papers, Taylor & Francis Journals, vol. 49(2), pages 134-156, August.
    13. Hyun Kim & David Marcouiller, 2015. "Considering disaster vulnerability and resiliency: the case of hurricane effects on tourism-based economies," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 54(3), pages 945-971, May.
    14. Kevin Luo & Tomoko Kinugasa, 2018. "Do natural disasters influence long-term saving?: Assessing the impact of the 2008 Sichuan earthquake on household saving rates using synthetic control," Discussion Papers 1804, Graduate School of Economics, Kobe University.
    15. Miles Parker, 2016. "The impact of disasters on inflation," Reserve Bank of New Zealand Discussion Paper Series DP2016/06, Reserve Bank of New Zealand.
    16. Vu, Tam Bang & Noy, Ilan, 2013. "Natural disasters and firms in Vietnam," Working Paper Series 3063, Victoria University of Wellington, School of Economics and Finance.
    17. repec:spr:nathaz:v:89:y:2017:i:2:d:10.1007_s11069-017-2998-9 is not listed on IDEAS
    18. Noy, Ilan, 2015. "Natural disasters and climate change in the Pacific island countries: New non-monetary measurements of impacts," Working Paper Series 4200, Victoria University of Wellington, School of Economics and Finance.
    19. Azreen Karim & Ilan Noy, 2016. "Poverty And Natural Disasters — A Qualitative Survey Of The Empirical Literature," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 61(01), pages 1-36, March.
    20. Meri Davlasheridze & Qin Fan, 2017. "Household Adjustments to Hurricane Katrina," The Review of Regional Studies, Southern Regional Science Association, vol. 47(1), pages 92-112, Winter.
    21. Kurosaki, Takashi, 2015. "Household-Level Recovery after Floods in a Tribal and Conflict-Ridden Society," CEI Working Paper Series 2015-5, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
    22. Vu, Tam Bang & Noy, Ilan, 2013. "Regional Effects of Natural Disasters in China," Working Paper Series 2812, Victoria University of Wellington, School of Economics and Finance.
    23. Kurosaki, Takashi, 2013. "Vulnerability of Household Consumption to Floods and Droughts in Developing Countries: Evidence from Pakistan," CEI Working Paper Series 2012-10, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
    24. Tam Vu & Ilan Noy, 2015. "Regional effects of natural disasters in China: investing in post-disaster recovery," 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. 75(2), pages 111-126, February.
    25. Kleis, Mischa & Moessinger, Marc-Daniel, 2016. "The long-run effect of fiscal consolidation on economic growth: Evidence from quantitative case studies," ZEW Discussion Papers 16-047, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.

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