Creatively Destructive Hurricanes: Do Disasters Spark Innovation?

Abstract

We investigate whether disasters can lead to innovation. We construct a US county-level panel of hurricane damages using climate data, hurricane tracks, and a wind field model and match these to patent applications by the location of their inventor over the last century in the United States. We examine both general innovation and patents that explicitly mention the terms ’hurricane’ or ’storm.’ In line with the current literature that hypothesizes innovative activity driven by shocks, in particular innovation intended to mitigate future shocks, we find that hurricanes lead to temporary boost in damage-mitigating patents a few years after the event. However, we also show there is long-term, lasting over two decades, general reduction of innovation after a damaging storm. We conclude that hurricanes, and possibly other types of disasters, cannot be viewed as a ’benefit in disguise,’ and that these events are unlikely to generate longer-term beneficial dynamics in an adversely affected location.

Green Firms, Environmental Hazards, and Investment

“…[33] demonstrates that firms exposed to floods increase their investments in intangible research and development but reduce their spending on tangible capital. On the other hand, firms can increase investments in research and development (R&D) and innovations in order to increase their ability to adjust to a new environment [34][35][36][37]. Consistently, Ref.…”

“…They hypothesize that disasters can accelerate a 'quasi-Schumpeterian' process of creative destruction, particularly in the context of climate-related events such as flooding. Additionally, there is robust empirical evidence showing that natural disasters drive increased innovation in risk mitigation technologies in both manufacturing and agricultural industries [11,[34][35][36][37][38][39]. Specifically, the "risk-mitigating innovation" refers to the development of new and more effective technologies that aid individuals in coping better with natural disasters and building resilience against future shocks.…”

Climate risk and renewable energy technological innovation: An institutional environment perspective

“…In terms of innovation, climate disasters also significantly hamper technological innovation and the transfer of such technology, by damaging communications and transportation facilities (Chen, Li, et al, 2021). Moreover, CR negatively affects energy or green innovation by impeding economic growth and financial development, undermining human capital accumulation, reducing R&D activities, and increasing political instability (Noy & Strobl, 2023;Wen et al, 2023;Zhao et al, 2022). Despite this, the influence of CR on RETI has been largely overlooked.…”

Large-scale Natural Disaster and Rising Costs Overtime—Heterogeneous Evolvement from Spatiotemporal Correlation Analysis on Tropical Cyclone Impacts in China during 2003-2018

“…The second focuses on the long-term effects (indirect effects) of TC, such as the effect of disasters on the economic development and population growth of the region, or the impact of disasters on the surrounding region and other businesses along the upstream or downstream industrial chain. (Belasen & Polachek 2009;Coffman & Noy 2012;Hallegatte 2008;Kim & Yoon 2020;Krichene et al 2021;Noy & Strobl 2022). This paper belongs to the first category, which entails thorough research on the characteristics and rules of immediate and short-term social and economic costs after the landing of TCs.…”