Natural disasters, economic growth and spatial spillovers: Evidence from a flash flood in Brazil

Abstract

In this paper, a flash flood that occurred in the Brazilian state of Santa Catarina in 2008 is used to investigate the existence of spatial spillovers from natural disasters in geographically‐linked areas. In order to do so, we estimated a Difference‐in‐Differences model that explicitly allows for the existence of spatial interactions within affected and unaffected regions. Our results show that municipalities directly affected by the flood suffered an 7.6% decrease in GDP per capita in the year of the disaster. Three years after the flood, however, GDP per capita rebounded back to pre‐disaster levels in all sectors but the Agricultural sector. Finally, our spatial estimations show that spillovers exist and are economically relevant.

Natural disasters and economic growth in Northeast Brazil: evidence from municipal economies of the Ceará State

“…Therefore, this paper contributes to the growing literature dedicated to understanding the effects of natural disasters on economic growth (Cavallo and Noy, 2011) by adding new evidence from a large developing country. In particular, the current study shows how responsive economic growth is to environmental shocks in a poor region of Brazil, whereas other recent studies provided evidence from developed regions of the country (Ribeiro et al , 2014; Haddad and Teixeira, 2015; de Lima and Barbosa, 2018). Moreover, the study provides evidence of the role played by WSI (Hallegatte, 2009; Gutiérrez et al , 2014) and disaster microinsurance (Cummins and Mahul, 2009; Clarke and Grenham, 2013) in the adaptation and response to natural disasters associated with climate change.…”

“…Recent evidence from Brazil has shown the negative consequences of intense floods on economic growth in developed states. For instance, Ribeiro et al (2014) show that the 2008 floods in Santa Catarina reduced industrial production by 5.1 per cent, while de Lima and Barbosa (2018) show a drop of approximately 7.6 per cent in GDP per capita. Haddad and Teixeira (2015) find that floods reduce city growth and residents' welfare in São Paulo, although economic activity in large urban centres tends to recover quickly from severe floods (Kocornik-Mina et al , 2015).…”

Post-Disaster Spillovers: Evidence from Iranian Provinces

“…Their results show how industries and regions that were not directly affected by storm and flood damage suffered significant job and income losses throughout upstream supply chains. Third, Barbosa and Lima (2019) study the case of flash floods in Brazil using a difference-in-differences model and show that municipalities directly affected by a flood suffered an 8.47% decrease in GDP per capita on the year of the disaster, and that there are significant spillovers to neighboring regions.…”

Impactos da estrutura etária sobre o desempenho econômico das regiões do Brasil entre 1991 e 2010

“…Assim, diversos autores argumentam que o nível de renda de longo prazo de uma dada localidade depende não apenas de suas características próprias, mas também daquelas de seus vizinhos e do seu nível de conectividade com os mesmos. Consequentemente, em análises voltadas para a temática de crescimento regional, é importante que se contabilize explicitamente a dependência espacial AZZONI, 2006;LESAGE;FISCHER, 2008;CAPELLO, 2009;RESENDE, 2011;ÖZYURT;DAUMAL, 2013;SILVEIRA NETO, 2016;BARBOSA, 2019).…”