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A bridge over troubled water: flooding shocks and supply chains

Author

Listed:
  • Gert Bijnens

    (Economics and Research Department, National Bank of Belgium)

  • Mariano Montoya

    (KU Leuven, Department of Economics)

  • Stijn Vanormelingen

    (KU Leuven, Department of Economics)

Abstract

This paper estimates how the impact of a natural disaster propagates through the production network. More precisely, we look at the excessive rainfall in the summer of 2021 that caused large areas to be severely flooded in Belgium. We first look at the direct effects on firms active in the flooded areas and find substantial negative effects on sales and employment. Next, we investigate how these shocks propagate through the network, thereby differentiating explicitly between upstream and downstream linkages. Our results show that the floods had a strong negative impact on the performance of firms active in the area. In terms of the supply chain effects, we find negative and persistent effects on sales for firms with upstream exposure.

Suggested Citation

  • Gert Bijnens & Mariano Montoya & Stijn Vanormelingen, 2024. "A bridge over troubled water: flooding shocks and supply chains," Working Paper Research 466, National Bank of Belgium.
    • Handle: RePEc:nbb:reswpp:202410-466
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    File URL: https://www.nbb.be/nl/articles/bridge-over-troubled-water-flooding-shocks-and-supply-chains
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    More about this item

    Keywords

    : Flooding; climate change; firms; production network;
    All these keywords.

    JEL classification:

    • D57 - Microeconomics - - General Equilibrium and Disequilibrium - - - Input-Output Tables and Analysis
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • 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
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

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