Economics of extreme weather events: Terminology and regional impact models

Abstract

a b s t r a c tImpacts of extreme weather events are relevant for regional (in the sense of subnational) economies and in particular cities in many aspects. Cities are the cores of economic activity and the amount of people and assets endangered by extreme weather events is large, even under the current climate. A changing climate with changing extreme weather patterns and the process of urbanization will make the whole issue even more relevant in the future. In this paper, definitions and terminology in the field of extreme weather events are discussed. Possible regional impacts of extreme weather events are collected, focusing on European cities. The human contributions to those impacts are emphasized. Furthermore, methodological aspects of economic impact assessment are discussed along a temporal and a sectoral dimension. Finally, common economic impact models are compared, analyzing their strengths and weaknesses.

Socio-Economic Implications of Drought in the Agricultural Sector and the State Economy

“…However, regional evaluations are only a small part of the drought problem around the globe. Severe droughts and weather variability have been observed in many countries causing changes in ecosystems [18,19], availability of natural resources [20], economic losses [21], and changes to social welfare [22,23]. This continuous and repetitive pattern of mid-and long-term weather variability can be seen as an indicator of future long-term drought events and consequently induce new regional, national, and international institutions for mitigating drought.…”

Estimating Direct and Indirect Damages from Storm Surges: The Case of Hamburg—Wilhelmsburg

“…The choice of the model type depends on the regional and sectorial scales of the investigation as well as the time scale and on whether the impact assessment is retrospective or prospective, i.e. whether the event actually happened (retrospective) or is simulated as a possible event (prospective) [Jahn, 2013].…”

“…This concept allows to account for social and distributional effect [Jahn, 2013]. However, CGE models are also criticized for their use in modeling disaster impacts.…”

“…Furthermore, impacts might be underestimated due to the smoothing effects of the price changes, the reduction in demand, and the substitution of inputs in the production process [Hallegatte, 2012]. In the end, the assumption of optimization behavior and thus, equilibrated market situations, neglect temporary disequilibria due to supply bottlenecks or overshooting reconstruction [Jahn, 2013]. The other model type, which has been employed in many studies to analyze the economic impact of disasters, is the IO model framework [e.g.…”

Impact of Cold Waves and Heat Waves on the Energy Production Sector

“…The reason for such a separate analysis is the diversity of effects associated to extreme events: heat waves affect the generation, transmission and distribution of electricity and may lead to blackouts or reductions in the electricity supply [13]. However, cold waves are more likely to affect the energy network and provoke electricity supply cuts [14]. Table 1 lists some well known power outage events resulting from weather conditions associated with heat and cold waves.…”