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Estimating the Economic Impact of Natural and Social Disasters, with an Application to Hurricane Katrina

Author

Listed:
  • Robert A. Baade

    (Department of Business and Economics, Lake Forest College, Lake Forest, IL 60045, USA, baade@lfc.edu)

  • Robert Baumann

    (Department of Economics, Box 192A, College of the Holy Cross, Worcester, MA 01610, USA, rbaumann@holycross.edu)

  • Victor Matheson

    (Department of Economics, Box 192A, College of the Holy Cross, Worcester, MA 01610, USA, vmatheso@holycross.edu)

Abstract

This paper examines taxable sales in the Los Angeles and Miami metropolitan areas to find evidence of the short- and long-run effects of the Rodney King riots and Hurricane Andrew on their respective economies. The comparison of these two events shows that the King riots had a long-term negative effect on Los Angeles' economy while Hurricane Andrew had a short-term positive effect on the Miami economy. The paper also applies the contrasting experiences of Los Angeles and Miami to New Orleans following Hurricane Katrina. In some ways, Katrina is a hybrid of these two events since it combines elements of both a natural disaster and a social disaster. The paper examines how Katrina is similar to each of the previous incidents and how these similarities might affect the recovery of New Orleans following the storm.

Suggested Citation

  • Robert A. Baade & Robert Baumann & Victor Matheson, 2007. "Estimating the Economic Impact of Natural and Social Disasters, with an Application to Hurricane Katrina," Urban Studies, Urban Studies Journal Limited, vol. 44(11), pages 2061-2076, October.
  • Handle: RePEc:sae:urbstu:v:44:y:2007:i:11:p:2061-2076
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    References listed on IDEAS

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    1. Paulo Guimaraes & Frank L. Hefner & Douglas P. Woodward, 1993. "Wealth And Income Effects Of Natural Disasters: An Econometric Analysis Of Hurricane Hugo," The Review of Regional Studies, Southern Regional Science Association, vol. 23(2), pages 97-114, Fall.
    2. Victor Matheson, 2009. "Economic Multipliers and Mega-Event Analysis," International Journal of Sport Finance, Fitness Information Technology, vol. 4(1), pages 63-70, February.
    3. Carol T. West & David G. Lenze, 1994. "Modeling the Regional Impact of Natural Disaster and Recovery: A General Framework and an Application to Hurricane Andrew," International Regional Science Review, , vol. 17(2), pages 121-150, August.
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    5. Victor A. Matheson & Robert A. Baade, 2004. "Race and Riots: A Note on the Economic Impact of the Rodney King Riots," Urban Studies, Urban Studies Journal Limited, vol. 41(13), pages 2691-2696, December.
    6. Stanley Smith & Christopher McCarty, 1996. "Demographic effects of natural disasters: a case study of hurricane andrew," Demography, Springer;Population Association of America (PAA), vol. 33(2), pages 265-275, May.
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    Citations

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    Cited by:

    1. Matthew Ranson & Lisa Tarquinio & Audrey Lew, 2016. "Modeling the Impact of Climate Change on Extreme Weather Losses," NCEE Working Paper Series 201602, National Center for Environmental Economics, U.S. Environmental Protection Agency, revised May 2016.
    2. Brata, Aloysius Gunadi, 2010. "Regional Development for a Disastrous Country," MPRA Paper 23606, University Library of Munich, Germany.
    3. repec:wly:riskan:v:39:y:2019:i:6:p:1314-1341 is not listed on IDEAS
    4. Noli Brazil, 2016. "Large-Scale Urban Riots and Residential Segregation: A Case Study of the 1960s U.S. Riots," Demography, Springer;Population Association of America (PAA), vol. 53(2), pages 567-595, April.
    5. 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.
    6. Robert A. Baade & Robert Baumann & Victor A. Matheson, 2008. "Selling the Game: Estimating the Economic Impact of Professional Sports through Taxable Sales," Southern Economic Journal, Southern Economic Association, vol. 74(3), pages 794-810, January.
    7. Man Li & Tao Ye & Peijun Shi & Jian Fang, 2015. "Impacts of the global economic crisis and Tohoku earthquake on Sino–Japan trade: a comparative perspective," 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(1), pages 541-556, January.
    8. 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.
    9. repec:spr:apjors:v:3:y:2019:i:1:d:10.1007_s41685-018-0093-1 is not listed on IDEAS
    10. repec:spr:nathaz:v:91:y:2018:i:3:d:10.1007_s11069-017-3163-1 is not listed on IDEAS
    11. Yasuhide Okuyama, 2015. "How shaky was the regional economy after the 1995 Kobe earthquake? A multiplicative decomposition analysis of disaster impact," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 55(2), pages 289-312, December.
    12. Robert Baade & Robert Baumann & Victor Matheson, 2006. "The Economic Consequences of Professional Sports Strikes and Lockouts: Revisited," Working Papers 0604, College of the Holy Cross, Department of Economics.
    13. Cherie Courseault Trumbach & Dinah M. Payne, 2015. "Technology development and disasters: is there a silver lining to the dark cloud?," International Journal of Business Continuity and Risk Management, Inderscience Enterprises Ltd, vol. 6(2), pages 121-136.
    14. Wang, Haoying, 2017. "Market Response to Flood Risk: An Empirical Study of Housing Values Using Boundary Discontinuities," MPRA Paper 85493, University Library of Munich, Germany.
    15. Robert Baade & Victor Matheson, 2007. "NFL Governance and the Fate of the New Orleans Saints: Some Observations," Working Papers 0703, College of the Holy Cross, Department of Economics.
    16. Aaron B. Gertz & James B. Davies & Samantha L. Black, 2019. "A CGE Framework for Modeling the Economics of Flooding and Recovery in a Major Urban Area," Risk Analysis, John Wiley & Sons, vol. 39(6), pages 1314-1341, June.
    17. Yuepeng Cui & Daan Liang & Bradley T. Ewing & Ali Nejat, 2016. "Development, specification and validation of Hurricane Resiliency Index," 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. 82(3), pages 2149-2165, July.
    18. Victor Matheson, 2006. "Mega-Events: The effect of the world’s biggest sporting events on local, regional, and national economies," Working Papers 0610, College of the Holy Cross, Department of Economics.
    19. Yasuhide Okuyama, 2016. "Long-Run Effect Of A Disaster: Case Study On The Kobe Earthquake," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 61(01), pages 1-18, March.
    20. Baade, Robert A. & Matheson, Victor A., 2012. "Professional sports, hurricane Katrina, and the economic redevelopment of New Orleans," Edition HWWI: Chapters, in: Büch, Martin-Peter & Maennig, Wolfgang & Schulke, Hans-Jürgen (ed.), Zur Ökonomik von Spitzenleistungen im internationalen Sport, volume 3, pages 123-146, Hamburg Institute of International Economics (HWWI).
    21. Kousky, Carolyn, 2014. "Informing climate adaptation: A review of the economic costs of natural disasters," Energy Economics, Elsevier, vol. 46(C), pages 576-592.
    22. K. Jenkins, 2013. "Indirect economic losses of drought under future projections of climate change: a case study for Spain," 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. 69(3), pages 1967-1986, December.
    23. Yu Xiao, 2011. "Local Economic Impacts Of Natural Disasters," Journal of Regional Science, Wiley Blackwell, vol. 51(4), pages 804-820, October.
    24. Shaughnessy, Timothy M. & White, Mary L. & Brendler, Michael D., 2010. "The Income Distribution Effect of Natural Disasters: An Analysis of Hurricane Katrina," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 40(1), pages 1-12.
    25. Edward Feser, 2013. "Isserman’s Impact," International Regional Science Review, , vol. 36(1), pages 44-68, January.

    More about this item

    JEL classification:

    • E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes
    • H59 - Public Economics - - National Government Expenditures and Related Policies - - - Other
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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