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Weather the storms? Resilience investment and production losses after hurricanes

Author

Listed:
  • Brannlund, Johan
  • Dunbar, Geoffrey
  • Ellwanger, Reinhard
  • Krutkiewicz, Matthew

Abstract

This paper studies whether resilience investment mitigates damages from extreme weather events using data on offshore oil production in the Gulf of Mexico. We show that hurricanes which pass near rigs lower production and that stronger storms have larger impacts which persist for months. Regulatory changes that required rigs be designed to be resilient to major hurricanes only modestly mitigated the short-run production losses from hurricanes, reducing oil production losses by roughly 5% at 1 month and 20% 8 months after impact. They also only partly mitigated long-run losses, lowering the probability that a rig permanently exits production by 12–18 percentage points after a hurricane.

Suggested Citation

  • Brannlund, Johan & Dunbar, Geoffrey & Ellwanger, Reinhard & Krutkiewicz, Matthew, 2023. "Weather the storms? Resilience investment and production losses after hurricanes," Journal of Environmental Economics and Management, Elsevier, vol. 122(C).
    • Handle: RePEc:eee:jeeman:v:122:y:2023:i:c:s0095069623001080
    DOI: 10.1016/j.jeem.2023.102890
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    More about this item

    Keywords

    Extreme weather; Resilience; Adaptation; Oil production;
    All these keywords.

    JEL classification:

    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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