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The Local Impact of Typhoons on Economic Activity in China: A View from Outer Space

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  • Robert J R Elliott
  • Eric Strobl
  • Puyang Sun

Abstract

We examine the impact of typhoons on local economic activity in coastal China. To capture potential damages from an individual typhoon we use historical typhoon track data in conjunction with a detailed wind-field model. We then combine our damage proxy with satellite derived nightlight intensity data to contact a panel data set that allows us to estimate the impact of typhoons at a spatially highly disaggregated level (approx. 1km). Our results show that typhoons have a negative and significant, but short term, impact on local activity - a typhoon that is estimated to destroy 50% of the property reduces local economic activity by 20% for that year. Over our period of analysis (1992-2010) total net economic losses are estimated to be in the region of US$28.34 billion. To assess the damage risk from future typhoons we use simulated probability distributions of typhoon occurrence and intensity and combine these with our estimated effects. Results suggest that expected annual losses are likely to be around US$0.54 billion.

Suggested Citation

  • Robert J R Elliott & Eric Strobl & Puyang Sun, 2015. "The Local Impact of Typhoons on Economic Activity in China: A View from Outer Space," Discussion Papers 15-11, Department of Economics, University of Birmingham.
  • Handle: RePEc:bir:birmec:15-11
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    Cited by:

    1. Laura A. Bakkensen & Xiangying Shi & Brianna D. Zurita, 2018. "The Impact of Disaster Data on Estimating Damage Determinants and Climate Costs," Economics of Disasters and Climate Change, Springer, vol. 2(1), pages 49-71, April.
    2. Brei, Michael & Mohan, Preeya & Strobl, Eric, 2019. "The impact of natural disasters on the banking sector: Evidence from hurricane strikes in the Caribbean," The Quarterly Review of Economics and Finance, Elsevier, vol. 72(C), pages 232-239.
    3. Gregor Pfeifer & Fabian Wahl & Martyna Marczak, 2018. "Illuminating the World Cup effect: Night lights evidence from South Africa," Journal of Regional Science, Wiley Blackwell, vol. 58(5), pages 887-920, November.
    4. Mohan, Preeya S. & Ouattara, Bazoumana & Strobl, Eric, 2018. "Decomposing the Macroeconomic Effects of Natural Disasters: A National Income Accounting Perspective," Ecological Economics, Elsevier, vol. 146(C), pages 1-9.
    5. 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.
    6. Martino Pelli & Jeanne Tschopp & Natalia Bezmaternykh & Kodjovi M Eklou, 2019. "In the Eye of the Storm: Firms and Capital Destruction in India," Cahiers de recherche 11-2019, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
    7. Xiaojia Bao & Jianan Li & Puyang Sun, 2019. "Typhoon, Earthquake and Food Price: Evidence from China," Working Papers 2019-07-08, Wang Yanan Institute for Studies in Economics (WISE), Xiamen University.
    8. Bleemer, Zachary & van der Klaauw, Wilbert, 2019. "Long-run net distributionary effects of federal disaster insurance: The case of Hurricane Katrina," Journal of Urban Economics, Elsevier, vol. 110(C), pages 70-88.
    9. Thomas Steinwachs, 2019. "Eine Frage der Geographie: Räumliche Dimensionen von Handel, Migration und Wachstum," ifo Beiträge zur Wirtschaftsforschung, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 81, December.
    10. Alejandro Valle & Robert J. R. Elliott & Eric Strobl & Meng Tong, 2018. "The Short-Term Economic Impact of Tropical Cyclones: Satellite Evidence from Guangdong Province," Economics of Disasters and Climate Change, Springer, vol. 2(3), pages 225-235, October.
    11. Cao Wang & Hao Zhang & Kairui Feng & Quanwang Li, 2017. "Assessing hurricane damage costs in the presence of vulnerability model uncertainty," 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. 85(3), pages 1621-1635, February.
    12. Achim Ahrens, 2015. "Civil conflicts in Africa: Climate, economic shocks, nighttime lights and spill-over effects," SEEC Discussion Papers 1501, Spatial Economics and Econometrics Centre, Heriot Watt University.
    13. Isabelle RABAUD & Daniel MIRZA & Hajare EL HADRI, 2018. "Why Natural Disasters Might Not Lead to a Fall in Exports in Developing Countries?," LEO Working Papers / DR LEO 2570, Orleans Economics Laboratory / Laboratoire d'Economie d'Orleans (LEO), University of Orleans.
    14. Cuong Nguyen & Ilan Noy, 2018. "Measuring the Impact of Insurance on Urban Recovery with Light: The 2010-2011 New Zealand Earthquakes," CESifo Working Paper Series 7031, CESifo Group Munich.
    15. Gabriel Felbermayr & Jasmin Katrin Gröschl & Mark Sanders & Vincent Schippers & Thomas Steinwachs & Gabriel J. Felbermayr, 2018. "Shedding Light on the Spatial Diffusion of Disasters," CESifo Working Paper Series 7146, CESifo Group Munich.
    16. Gabriel Felbermayr & Jasmin Katrin Gröschl & Mark Sanders & Vincent Schippers & Thomas Steinwachs & Gabriel J. Felbermayr, 2018. "Shedding Light on the Spatial Diffusion of Disasters," CESifo Working Paper Series 7146, CESifo Group Munich.
    17. Sally Owen & Ilan Noy & Jacob Pástor-Paz & David Fleming, 2019. "EQC and extreme weather events (part 2): Measuring the impact of insurance on New Zealand landslip, storm and flood recovery using nightlights," Working Papers 19_19, Motu Economic and Public Policy Research.
    18. Nguyen, Cuong & Noy, Ilan, 2018. "Measuring the impact of insurance on urban recovery with light: The 2011 New Zealand earthquake," Working Paper Series 6955, Victoria University of Wellington, School of Economics and Finance.

    More about this item

    Keywords

    China; typhoons; wind field model; economic impact; nightlight imagery;

    JEL classification:

    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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