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

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  • SAWADA Yasuyuki
  • NAKATA Hiroyuki
  • SEKIGUCHI Kunio

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

  • SAWADA Yasuyuki & NAKATA Hiroyuki & SEKIGUCHI Kunio, 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.
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    3. World Bank & United Nations, 2010. "Natural Hazards, UnNatural Disasters : The Economics of Effective Prevention," World Bank Publications, The World Bank, number 2512, December.
    4. Robert J. Barro, 2009. "Rare Disasters, Asset Prices, and Welfare Costs," American Economic Review, American Economic Association, vol. 99(1), pages 243-264, March.
    5. 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.
    6. 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.
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    Cited by:

    1. ADACHI Daisuke & NAKATA Hiroyuki & SAWADA Yasusyuki & SEKIGUCHI Kunio, 2016. "Adverse Selection and Moral Hazard in the Corporate Insurance Market: Evidence from the 2011 Thailand floods," Discussion papers 16025, Research Institute of Economy, Trade and Industry (RIETI).
    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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