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Extreme Weather Events and Local Fiscal Responses: Evidence from U.S. Counties

Author

Listed:
  • Qing Miao

    (Rochester Institute of Technology)

  • Michael Abrigo

    (Philippine Institute for Development Studies)

  • Yilin Hou

    (Syracuse University)

  • Yanjun (Penny) Liao

    (Resources for the Future)

Abstract

This paper examines the impacts of floods and hurricanes on U.S. county government finances. Using a novel event study model that allows for heterogeneous treatment effects, we find that a flood or hurricane presidential disaster declaration (PDD) lowers tax revenue but increases government spending and intergovernmental revenues. Compared to flooding, hurricanes result in much larger repercussions on both revenues and borrowing. Our results also suggest disparate patterns of disaster-induced long-run fiscal impacts in counties with different socioeconomic conditions. Counties with lower incomes or greater social vulnerability tend to experience tax revenue losses and engage in more borrowing after a PDD, whereas higher-income counties see increased tax revenues and spending and also receive more intergovernmental transfers than their poorer counterparts.

Suggested Citation

  • Qing Miao & Michael Abrigo & Yilin Hou & Yanjun (Penny) Liao, 2023. "Extreme Weather Events and Local Fiscal Responses: Evidence from U.S. Counties," Economics of Disasters and Climate Change, Springer, vol. 7(1), pages 93-115, March.
    • Handle: RePEc:spr:ediscc:v:7:y:2023:i:1:d:10.1007_s41885-022-00120-y
    DOI: 10.1007/s41885-022-00120-y
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    Cited by:

    1. Liao, Yanjun (Penny) & Sølvsten, Simon & Whitlock, Zachary, 2024. "Community Responses to Flooding in Risk Mitigation Actions: Evidence from the Community Rating System," RFF Working Paper Series 24-08, Resources for the Future.

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    More about this item

    Keywords

    Natural disasters; Extreme weather events; Public finance; Event study model; Local governments;
    All these keywords.

    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • H74 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Borrowing

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