Naturally Negative: The Growth Effects of Natural Disasters

By Gabriel Felbermayr, J. Gröschl. Social Science Research Network, 2014

504 citations recorded by the source corpus.

Growth theory predicts that natural disasters should, on impact, lower GDP per capita. However, the empirical literature does not offer conclusive evidence. Most existing studies use disaster data drawn from damage records of insurance companies. We argue that this may lead to estimation bias as damage data and the selection into the database may correlate with GDP. We build a comprehensive database of disaster events and their intensities from primary geophysical and meteorological information. In contrast to insurance data, our GeoMet data reveal a substantial negative and robust average impact effect of disasters on growth. The worst 5% disaster years come with a growth damage of at least 0.45 percentage points. That average effect is driven mainly by very large earthquakes and some meteorological disasters. Poor countries are more strongly affected by geophysical disasters; rich more by meteorological events. International openness and democratic institutions reduce the adverse effect of disasters.

View Paper: https://www.semanticscholar.org/paper/8fdb87dae706ea2933f393d05805f7cd77e6d731

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Citations in the corpus

The Impact of Disasters on Inflation (2017, unknown): “As a robustness check, we also undertake the analysis using the Ifo GAME database of geological and meteorological hazards, presented in Felbermayr and Gröschl (2014).”
The impact of climate vulnerability on firms’ cost of capital and access to finance (2021, background): “More recently, Huang et al. (2018) analyze a dataset comprising 353,906 observations from 55 countries and find that climate risk at country level might be negatively related to firm earnings and positively related to earnings volatility. Previous research has also indicated that various environment”
The Economic Impacts of Natural Disasters: A Review of Models and Empirical Studies (2019, methodology): “Noy (2009) and Toya and Skidmore (2007) use EM-DAT data in their analysis, but Felbermayr and Gröschl (2014) find the same results using GeoMet data.”
From Poverty to Disaster and Back: a Review of the Literature (2020, background): “For example, Felbermayr and Gröschl (2014) find that disasters in the top decile of magnitude result on average in a 3% reduction in GDP growth.”
A meta-analysis of the literature on climate change and migration (2021, background): “This might lead to a decrease in the likelihood of finding an economic impact of natural disasters (Felbermayr and Gröschl (2014)).”
Economic Vulnerability and Resilience to Natural Hazards: A Survey of Concepts and Measurements (2018, background): “Some opt to directly use proxies for the hazards, such as wind-speed, or the magnitude of an earthquake [61,62].”