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Hurricanes, flood risk and the economic adaptation of businesses

Author

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  • Agustín Indaco
  • Francesc Ortega
  • Süleyman Taṣpınar

Abstract

We use administrative data containing all business establishments in New York City to analyze how businesses reacted to flooding in the context of Hurricane Sandy (October 2012). We find that flooding led to reductions in employment (of about 4%) and average wages (of about 2%) among the affected businesses. The effects were substantially larger and more persistent in some parts of the city (Brooklyn and Queens) than others (Manhattan). Heterogeneity across boroughs reflects differences in the severity of flooding, building types and industry composition. The effects of flooding also vary by industry and businesses in sectors involved in rebuilding after the storm experienced employment growth. Flooding also led to establishment closings and relocation to other neighborhoods, which is a form of adaptation to increased flood risk.

Suggested Citation

  • Agustín Indaco & Francesc Ortega & Süleyman Taṣpınar, 2021. "Hurricanes, flood risk and the economic adaptation of businesses," Journal of Economic Geography, Oxford University Press, vol. 21(4), pages 557-591.
    • Handle: RePEc:oup:jecgeo:v:21:y:2021:i:4:p:557-591.
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    File URL: http://hdl.handle.net/10.1093/jeg/lbaa020
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    Cited by:

    1. Meltzer, Rachel & Ellen, Ingrid Gould & Li, Xiaodi, 2021. "Localized commercial effects from natural disasters: The case of Hurricane Sandy and New York City," Regional Science and Urban Economics, Elsevier, vol. 86(C).
    2. Wolf, David & Takeuchi, Kenji, 2022. "Holding back the storm: Dam capitalization in residential and commercial property values," Journal of Environmental Economics and Management, Elsevier, vol. 116(C).
    3. Apurba Roy & Ilan Noy, 2023. "Impact of extratropical cyclones, floods, and wildfires on firms’ financial performance in New Zealand," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 25(4), pages 493-574, October.
    4. Huang, Zenghe & Dong, Xiaofang, 2025. "When the levee breaks: The impact of floods on educational outcomes in China," Journal of Development Economics, Elsevier, vol. 174(C).
    5. Elsa Allman, 2022. "Pricing climate change risk in corporate bonds," Journal of Asset Management, Palgrave Macmillan, vol. 23(7), pages 596-618, December.
    6. Aiba, Ikuto & Hasegawa, Daisuke, 2025. "The impact of flooding on real estate transactions in densely populated areas: Evidence from the 2019 Typhoon Hagibis in Japan," Journal of the Japanese and International Economies, Elsevier, vol. 76(C).
    7. Katie Jo Black & Nicholas B. Irwin & Shawn J. McCoy, 2023. "Wildfire risk, salience, and housing development in the wildland–urban interface," Journal of Regional Science, Wiley Blackwell, vol. 63(4), pages 922-946, September.
    8. Skouralis, Alexandros & Lux, Nicole & Andrew, Mark, 2024. "Does flood risk affect property prices? Evidence from a property-level flood score," Journal of Housing Economics, Elsevier, vol. 66(C).
    9. Agustín Indaco & Francesc Ortega, 2024. "Adapting to Climate Risk? Local Population Dynamics in the United States," Economics of Disasters and Climate Change, Springer, vol. 8(1), pages 61-106, March.
    10. David Wolf & Kenji Takeuchi, 2022. "Who Gives a Dam? Capitalization of Flood Protection in Fukuoka, Japan," Discussion Papers 2203, Graduate School of Economics, Kobe University.

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    Keywords

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    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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