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Natural Disasters, Land Price, and Location of Firms: Evidence from Thailand

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  • Yasuyuki SAWADA
  • Hiroyuki NAKATA
  • Kunio SEKIGUCHI

Abstract

This paper reviews the impacts of natural disasters on firm location choice and real estate prices. More specifically, we first study if awareness of possible natural disasters affects location choice. Then, we investigate the impacts of natural disasters on land prices. We collect a unique micro dataset from firms operating in central Thailand, where firms located in the Chao Phraya flood plains incurred direct losses during the 2011 floods. The empirical evidence suggests that more firms located in the Chao Phraya flood plains were unaware of the flooding risk before the 2011 floods than those located elsewhere. The 2011 floods have substantially affected awareness among firms—in particular, firms incurred direct losses, and the changes in land prices suggest that an increasing number of firms have been choosing locations outside the flood plains in the aftermath of the 2011 floods.

Suggested Citation

  • Yasuyuki SAWADA & Hiroyuki NAKATA & Kunio SEKIGUCHI, 2014. "Natural Disasters, Land Price, and Location of Firms: Evidence from Thailand," Discussion papers 14029, Research Institute of Economy, Trade and Industry (RIETI).
    • Handle: RePEc:eti:dpaper:14029
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    References listed on IDEAS

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    1. David Strömberg, 2007. "Natural Disasters, Economic Development, and Humanitarian Aid," Journal of Economic Perspectives, American Economic Association, vol. 21(3), pages 199-222, Summer.
    2. Yasuyuki Sawada, 2007. "The impact of natural and manmade disasters on household welfare," Agricultural Economics, International Association of Agricultural Economists, vol. 37(s1), pages 59-73, December.
    3. Noy, Ilan, 2009. "The macroeconomic consequences of disasters," Journal of Development Economics, Elsevier, vol. 88(2), pages 221-231, March.
    4. repec:wbk:wbpubs:2512 is not listed on IDEAS
    5. Colin F. Camerer & Howard Kunreuther, 1989. "Decision processes for low probability events: Policy implications," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 8(4), pages 565-592.
    6. Robert J. Barro, 2009. "Rare Disasters, Asset Prices, and Welfare Costs," American Economic Review, American Economic Association, vol. 99(1), pages 243-264, March.
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    Cited by:

    1. Adachi, Daisuke & Nakata, Hiroyuki & Sawada, Yasuyuki & Sekiguchi, Kunio, 2023. "Adverse selection and moral hazard in corporate insurance markets: Evidence from the 2011 Thailand floods," Journal of Economic Behavior & Organization, Elsevier, vol. 205(C), pages 376-386.
    2. Yasuyuki Sawada & Hiroyuki Nakata & Kunio Sekiguchi & Yoko Okuyama, 2018. "Land and Real Estate Price Sensitivity to a Disaster: Evidence from the 2011 Thai Floods," Economics Bulletin, AccessEcon, vol. 38(1), pages 89-97.

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