how did the tropical cyclone impact the economy of florence

During 6 February, the Australian Bureau of Meteorology (BoM) reported that the tropical low had developed into a Category 1-cyclone on the Australian scale . https://unstats.un.org/unsd/snaama/assets/pdf/methodology.pdf, United Nations Statistical Division (2015c) UN data. To identify the causal effects of tropical cyclone intensity on sectoral per capita growth, I use the following set of regression equations, which constitutes my main specifications: where the dependent variable $Growth_{i,t-1->t}^j$ is the annual value added per capita growth rate of sector j in country i. For large weather systems, the circulation pattern is in a counterclockwise direction in the Northern Hemisphere and a clockwise direction in the Southern Hemisphere. The wind speed drops with distance to the center of the hurricane and as soon as it makes landfall. However, since agricultural areas are seldom highly populated, using a population-weighted damage function for the agricultural sectors would be biased. Tropical cyclones can have devastating economic consequences. Climate change will lead to fewer tropical cyclones overall. 2019). 2019). Cyclones also can bring torrential rains that lead to flooding. Natural Hazard-Induced Disasters and Production Efficiency: Moving Closer to or Further from the Frontier? 8 thus reduces the complexity of the analysis by showing only the sign of the significant coefficients together with color intensities representing different p-values. Ecol Econ 85:105115, Schreck CJ, Knapp KR, Kossin JP (2014) The impact of best track discrepancies on global tropical cyclone climatologies using IBTrACS. 2012). The results can be found in Fig. Since the EORA26 database also offers the data decomposed for 26 sectors, this section demonstrates the results of model 6 in more detail. Additionally, tropical cyclone intensity is measured by remote sensing methods and other meteorological measurements. Country-year observations above two standard deviations are labeled with the respective ISO3 code. It asks for less input from the wholesale, retail trade, restaurants, hotels and mining and utilities sector aggregates, which results from a supply shock in the agricultural sector. Weather Clim Soc 3(4):261268, Felbermayr G, Grschl J (2014) Naturally negative: the growth effects of natural disasters. This assumption is relaxed in further specifications by allowing more flexible country-specific trends (e.g., squared). The storm will likely damage homes. 2019). Their destructiveness has three sources: damaging winds, storm surges, and heavy rainfalls. This study aims to better understand the sectoral impacts of tropical cyclones by looking at the direct and indirect effects in a large data set covering 205 countries from 1970 to 2015. Econometrica 55(3):703708, Newson R (1998) PARMEST: Stata module to create new data set with one observation per parameter of most recent model. Google Scholar, Albala-Bertrand J-M (1993) Natural disaster situations and growth: a macro-economic model for sudden disaster impacts. Furthermore, the results of the randomization test show that the $H_0$ of no effect of tropical cyclone damage can be rejected at the 1% and 5% level of confidence for the agriculture, hunting, forestry, and fishing and wholesale, retail trade, restaurants, and hotels sectors, respectively. To analyze potential indirect effects which could emerge because of changes in the InputOutput composition of the individual sectors, I test the following set of equations for the different Input(j)Output(k) combinations: where $IO_{i,t}^{j,k}$ indicates the InputOutput coefficient of sectors j and k in year t and country i. 2012), recent empirical studies focus on the shock propagation in production networks within the United States of America (Barrot & Sauvagnat 2016) or after single natural disasters, such as the 2011 earthquake in Japan (Boehm etal. How do tropical storms affect people and the environment? For example, Loayza etal. As my panel has a length of 2545years, depending on the chosen model, I assume this bias will not influence my analysis.Footnote 19 Second, all control variables are measured in $t-1$ to reduce potential endogeneity problems stemming from the fact that control variables in t can also be influenced by tropical cyclone intensities in t (Dell etal. The procedure is hierarchical and reaches from other official governmental publications over publications from other international organizations to the usage of data from commercial providers (United Nations Statistical Division 2015b). I also checked for different lag lengths, but could hardly find any effect above a lag length of five years. Kunze, S. Unraveling the Effects of Tropical Cyclones on Economic Sectors Worldwide: Direct and Indirect Impacts. Furthermore, one could also argue that the estimation results are biased by the fact that certain regions have a higher exposure to tropical cyclones than others. Below is the link to the electronic supplementary material. Figure 6 demonstrates that three out of seven sectoral aggregates suffer from delayed negative impacts of tropical cyclones. Pictured: The East Coast of the U.S. and the Gulf of Mexico viewed by satellite as Hurricane Florence made landfall on September 14. Notes The y-axis displays the cumulative coefficient of tropical cyclone damage on the respective per capita growth rates, and the x-axis shows the years since the tropical cyclone passed. Since the tropical cyclone data has global coverage since 1950, I am able to introduce lags of up to 20years without losing observations of my dependent variable, which ranges from 1971 to 2015. Additionally, I allow for country-specific linear trends $\mu _i*t$. 2014). Acemoglu D, Carvalho VM, Ozdaglar A, Tahbaz-Salehi A (2012) The network origins of aggregate fluctuations. Details of How did the tropical cyclone eloise impact the environment? This importance for the sectoral composition was already demonstrated by Bulte etal. The winds are driven by this low-pressure core and by the rotation of Earth, which deflects the path of the wind through a phenomenon known as the Coriolis force. In the years following a tropical cyclone, the majority of sectors experience negative growth effects. Circle diameters represent the average proportional share on total GDP ranging from 32% (other activities), over 12% (manufacturing) to 6% (construction).Footnote 25. Moreover, I include time fixed effects $\delta _t$ to account for time trends and other events common to all countries in the sample. However, an area weight has the disadvantage of including largely unpopulated areas, such as deserts, which are economically meaningless. So unfortunately, WA can expect regular cyclone impacts even as the climate . 0.1$^{\circ }$ corresponds to approximately 10km at the equator. Color intensities indicate p values according to: $p<0.01$, $p<0.05$, $p<0.1$. The main specification is estimated for each of the $j(={1,,7})$ sector aggregates separately. The storm started to form as the result of an area of low pressure over Western Africa. Technical report, Universit catholique de Louvain (UCL). Immediately after the disaster, the policy should concentrate on the agriculture, hunting, forestry, and fishing, and the wholesale, retail trade, restaurants, and hotels sector aggregates, as they are most vulnerable, and/or recovery measures have not been conducted efficiently in these sectors. In addition, they can also have a significant impact on the national economy, particularly in countries like India where a large proportion of the population is dependent on agriculture. Int J Remote Sens 38(21):59926006, Mohan PS, Spencer N, Strobl E (2019) Natural hazard-induced disasters and production efficiency: moving closer to or further from the frontier? Econ J 129(619):13271342, He S (2017) Randomization inference with Stata: a guide and software. Therefore, they take 5-year averages of the number of affected people normalized by the total population as main explanatory variable. http://data.un.org/Explorer.aspx?d=SNAAMA, University of East Anglia Climatic Research Unit, Harris IC, Jones PD (2017) CRU TS4.01: climatic research unit (CRU) time-series (TS) version 4.01 of high-resolution gridded data of month-by-month variation in climate (Jan. 1901Dec. For storm surge damage this is not possible, since there exists no global data set so far. Possible mechanisms for this situation are, for example, additional capital flowssuch as remittances from relatives living abroad (Yang 2008)international aid (deMel etal. Compared to the existing literature, the non-existing of a direct positive contemporaneous response of the construction sector is a new finding. To address the varying economic exposure of affected areas, studies have used population (Strobl 2012), nightlight intensity (Heinen etal. The damage estimates can be found in Table1. However, time-delayed effects must also be taken into account since some damage, such as supply-chain interruptions or demand-sided impacts, will only be visible after a certain time lag (Kousky 2014; Botzen etal. 00:00 00:00 An unknown error has occurred While the importance of the fishing sector for indirect tropical cyclones effects is a novel finding, it does not mean that other agricultural sectors do not exhibit negative direct effects.Footnote 28. 2018; Elliott etal. Additionally, within the agriculture, hunting, forestry, and fishing sectors, only the fishing sector experiences indirect negative effects. The analysis is conducted on a country-year level. I decide to only examine changes in the InputOutput coefficients and not at indirect costs because it almost needs no assumptions. 1.Environment . What are 3 impacts of tropical cyclones? Econ Inquiry 46(2):214226, de Mel S, McKenzie D, Woodruff C (2012) Enterprise recovery following natural disasters. 4 displays the average InputOutput coefficients for all countries for all available years (19902015). 4 and 6 with the population weighted damage for the agricultural sectoral aggregate. First, as shown by Nickell (1981), there is a systematic bias of panel regressions with a lagged dependent variable and fixed effects. Additionally, a new damage measure is developed that considers the varying levels of exposure of different sectors. The build-back-better hypothesis describes a situation where natural disasters first trigger a downturn of the economy, which is then followed by a positive stimulus, leading to a higher growth path than in the pre-disaster period. (2019) show that indirect impacts are nearly as high as direct impacts. 7. Older empirical studies suffer to a large extent from endogeneity problems in their econometric analysis because their damage data are based on reports and insurance data, such as the Emergency Events Database (EM-DAT). However, on average, the previously found effects can be replicated for 12 out of the 15 robustness tests.Footnote 35 Given the reduced quality of the data and a shorter time span (20years), the InputOutput analysis still offers solid results. The situation is completely different in the wholesale, retail trade, restaurants, and hotels sector aggregate, where a negative influence can be observed over almost the entire 20-year period. 912, while Tables 511 show the regression results. (2012) use data from EM-DAT as main input for their explanatory variables. 2012), insurance payments (Nguyen and Noy 2019), or government spending (Ouattara and Strobl 2013), which help the economy reach its pre-disaster income level. The results are particularly pressing, as tropical cyclones will continue to intensify due to global warming (Knutson etal. Additionally, I cluster the standard errors at broader regional levels as a further robustness test. A study led by Kevin Reed, PhD, Assistant Professor in the School of Marine and Atmospheric Sciences (SoMAS) at Stony Brook University, and published in Science Advances, found that Hurricane. The findings could help to explain why there has been no discernible change in the number of tropical cyclones occurring globally over the past 40 years, says Murakami: "We don't find any clear trend in the number of global tropical cyclones over the last 40 years. In particular, I calculated the leverage and dfbeta of the damage coefficient. Each year the impacts of tropical cyclones and other weather, climate and water extremes around the Earth give rise to multiple casualties and significant damage to property and infrastructure, with adverse economic consequences for communities that can persist for many years. WMO continues to monitor the "remarkable" tropical storm, which has cut a destructive path across . On the other hand, EORA26 works continuously on quality check reports and compares its result to other InputOutput databases such as GTAP or WIOD.Footnote 13. (2012) find no significant for the service sector.Footnote 21 Likely reason for this downturn could be less (domestic and international) touristic income for the restaurant and hotel sectors (Hsiang 2010; Lenzen etal. This may be the reason why, on the aggregate level for indirect influences (see Fig. The number in parentheses compares the coefficients to the sample average of the respective InputOutput coefficient (in %). The recovery to trend hypothesis characterizes a pattern where after a negative effect in the short run, the economy recovers to the previous growth path after some time. I also tested for lagged cumulative effects. Additionally, it is unexplained how the sectors are interconnected and if their structural dependence changes. Since the commonly used report-based EM-DAT data set (Lazzaroni and van Bergeijk 2014) has been criticized for measurement errors (Kousky 2014), endogeneity, and reverse causality problems (Felbermayr and Grschl 2014), I use meteorological data on wind speeds to generate a proxy for the destructive power of tropical cyclones.Footnote 3 This approach is in line with previous empirical studies (e.g., Hsiang 2010; Strobl 2011, 2012), but I advance this literature by generating a sector-specific damage function. Nature 455(7209):9295, Emanuel K (2011) Global warming effects on U.S. hurricane damage. Therefore, I propose a new damage measure that explicitly considers these different exposures. How did the Tropical Cyclone Florence impact the people communities? B.E. Winds have lessened to 45 mph. First, I account for the economic exposure by weighting the maximum occurred wind speed per grid cell and year by the number of exposed people living in that grid cell relative to the total population of the country. For example, Hsiang (2010) finds an immediate positive response of the construction sector. Even though, I thereby omit potential rainfall and storm surge damage, it is a common simplification in the literature (Hsiang 2010; Strobl 2011; Strobl 2012; Elliott etal. The authors find that after the 2008 Wenchuan Earthquake neighboring counties suffer from indirect negative growth effects due to changes within the manufacturing sectors. J Econ Lit 52(3):740798, Dupor B (1999) Aggregation and irrelevance in multi-sector models. Furthermore, one can argue that only countries exposed to tropical cyclones are relevant for this analysis; therefore, Table 36 provides a regression of the main result for exposed countries only. Upon examining the underlying estimates in Tables 1213 in Appendix A.5, it is evident that the transport, storage, communication sectoral aggregate also turns negative, at least at the 90% confidence interval.Footnote 23. - 103.17.108.37. In the first test, I introduce a variable which counts the yearly frequency of tropical cyclones above 92 km/h per country (see Appendix Table 40 and Figs. The agricultural sector relies heavily on environmental conditions as most of its production facilities lie outside of buildings and are hence more vulnerable to the destructiveness of tropical cyclones. In subsequent years, tropical cyclones negatively affect the majority of all sectors. 2013). The impact of cyclones can be extremely devastating, both in terms of loss of life and damage to infrastructure. Princeton University Press, Princeton, Book InputOutput models that analyze indirect costs, such as the Inoperability Input-Ouptut model (Haimes and Jiang 2001) or the Ghosh model (Ghosh 1958), require many assumptions that tend to be problematic (Oosterhaven 2017). The second most indirectly affected sector is the construction sector. J Urban Econ 88:5066, Elliott RJ, Liu Y, Strobl E, Tong M (2019) Estimating the direct and indirect impact of typhoons on plant performance: evidence from Chinese manufacturers. How did the tropical cyclone impact the people communities? It is a unification of all best track data on tropical cyclones collected by weather agencies worldwide. Cumulative lagged influence of tropical cyclone damage on sectoral GDP growth (20years). This hypothesis is supported by empirical findings for a positive GDP growth effect for Latin American countries (Albala-Bertrand 1993), for high-income countries (Cuaresma etal. To be consistent with the remaining analysis, I aggregate the given 26 sectors to the previously used seven sectoral aggregates.Footnote 14 For my analysis, I calculate the InputOutput coefficients by dividing the specific input of each sector by the total input of each sector given in the transaction matrix of the data: The resulting InputOutput coefficients $IO^{j,k}$ range between 0 and 1 in year t. They indicate how much input from sector k is needed to produce one unit of output of sector j. Consequently, the InputOutput coefficients give an idea of the structural interactions of sectors within an economy and hence help to disentangle the indirect effects of tropical cyclone damage.Footnote 15. The absolute size of this effect is approximately more than 2.5 times the size of the coefficient in the wholesale, retail trade, restaurants, and hotels sector aggregate. Circle diameter is proportional to the average sectoral share on total GDP. (2019) demonstrate that there exist a short-term productivity efficiency increase after damaging hurricanes in the Caribbean. For tropical cyclones, no empirical cross-country study on indirect effects exists so far. Given that producers in modern economies are . Part of Springer Nature. Appendix A.3 provides a more detailed description of the composition of the individual ISIC categories. (Color figure online). Cyclones can produce flooding in two ways. Significant effects of tropical cyclone damage on InputOutput coefficients. Appendix A.5 presents further statistics: Figs. I find a significantly negative influence of tropical cyclones on two sector aggregates including agriculture, as well as trade and tourism. Furthermore, I use a more specific damage function than Hsiang & Jina (2014) which takes account of different sectoral exposure. It has been shown that the damage of tropical cyclones increases non-linearly with wind speed and occurs only above a certain threshold. 5. Observations were excluded if they were above the $(2k+2)/n$ threshold for leverage and above the 2/sqrt(n) threshold for dfbeta. Stagnant water can cause the spread of disease, and transportation or communication infrastructure may have been destroyed, hampering clean-up and rescue efforts. Exposed countries are defined as having at least one positive damage observation over the sample period. The start of the arrow shows the input, and the end denotes the respective output. Freddy has finally been declared over by the French Meteorological service. This large negative effect is not surprising. When water changes from a liquid to a gas, it absorbs heat, and when it changes from a gas to a liquid, it releases heat. Bull Am Meteorol Soc 91(3):363376, Knutson T, Camargo SJ, Chan JC, Emanuel K, Ho C-H, Kossin J, Mohapatra M, Satoh M, Sugi M, Walsh K et al (2020) Tropical cyclones and climate change assessment: part II: projected response to anthropogenic warming. The dynamic analysis reveals that past tropical cyclones have a negative influence on the majority of sectors providing evidence for the no recovery hypothesis discussed in the literature. The main causal identification stems from the occurrence of tropical cyclones, which are unpredictable in time and location (NHC 2016) and vary randomly within geographic regions (Dell etal. This behavior most likely speaks for an enduring risk adjustment of tourists. In order to design effective mitigation and adaptation disaster policies to this threat, it is important to understand the economic impact of natural disasters. This corresponds to a mean annual global loss of USD 16.7 billion (measured in constant 2005 USD) for the sample average. The cross-sectoral dependence is most pronounced for the manufacturing (D) and other activities (JP)sectoral aggregates. The remainder of this paper is structured as follows: Sect. Additionally, Cole etal. Unraveling the Effects of Tropical Cyclones on Economic Sectors Worldwide: Direct and Indirect Impacts, $$\begin{aligned} S_{g} = {\left\{ \begin{array}{ll} \max (0, ((M - abs(T)) * \frac{R}{D}^\frac{3}{2} *e^{1-\frac{R}{D}^\frac{3}{2}})+T),&{} \text {if }D<10*R \text { from center to outer core} \\ 0, &{} \text {if }D>10*R \text { out of radius}. 16 in Appendix A.5. Slider with three articles shown per slide. 4. As demonstrated in Fig. Anyone you share the following link with will be able to read this content: Sorry, a shareable link is not currently available for this article. The analysis of the past influences of tropical cyclone damage demonstrates that the sectoral growth response following a tropical cyclone is a complex undertaking. Tropical Cyclone Cheneso was a strong tropical cyclone that affected Madagascar in January 2023. Notes InputOutput coefficients show how much input one sector needs to produce one unit of output. 2018) or exposed area (Hsiang and Jina 2014) to weight the respective physical intensities of tropical cyclones. Moreover, for the vast majority of sectors, the indirect effects do not last longer than oneyear. Tropical cyclones are large, cyclonically rotating wind systems that form over tropical or sub-tropical oceans and are mostly concentrated on months in summer or early autumn in both hemispheres (Korty 2013). Put in relation to the sample average per capita growth rate (2.53%), the effect translates to a decrease of $-46$%.

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