The local impact of typhoons on economic activity in China: A view from outer space

Abstract

We examine the impact of typhoons on local economic activity in coastal China. To capture potential damages from an individual typhoon we use historical typhoon track data in conjunction with a detailed wind-field model. We then combine our damage proxy with satellite derived nightlight intensity data to construct a panel data set that allows us to estimate the impact of typhoons at a spatially highly disaggregated level (approx. 1km). Our results show that typhoons have a negative and significant, but short-term, impact on local activity -a typhoon that is estimated to destroy 50% of the property reduces local economic activity by 20% for that year. Over our period of analysis (1992-2010) total net economic losses are estimated to be in the region of US$28.34 billion. To assess the damage risk from future typhoons we use simulated probability distributions of typhoon occurrence and intensity and combine these with our estimated effects. Results suggest that expected annual losses are likely to be around US $0.54 billion.

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

“…These findings suggest the existence of short‐term negative effects on economic activity, with a quick recovery to pre‐disaster levels. This is along the lines of the “recovery to trend” hypothesis, also observed in the recent cross‐regional literature reported in Elliott et al (), Husby et al (), Tanaka () and Xiao et al (). Results are quantitatively the same when we add socioeconomic controls in our main specification (column 2), and present marginal changes when political controls are added (column (3)).…”

“…These findings suggest the existence of short-term negative effects on economic activity, with a quick recovery to pre-disaster levels. This is along the lines of the "recovery to trend" hypothesis, also observed in the recent cross-regional literature reported in Elliott et al (2015), Husby et al (2014), Tanaka (2015) and Xiao et al (2013).…”

The Impact of Disaster Data on Estimating Damage Determinants and Climate Costs

“…Specific to China, Elliott et al (2015) analyze the effects of typhoons on local economic activity through the use of nightlight luminosity data and detailed wind field reconstructions, finding local economic activity losses -separate from direct damages -to be approximately $1.6 billion per year historically. Assessing direct damages, Chen et al (2009) estimate detailed damage functions, incorporating precipitation, winds, and intensity to explain various outcomes including property and farmland losses.…”

“…12 In addition, although not modeling direct damages, Elliott et al (2015) estimate annual losses of $1.6 billion from reductions in economic activity due to cyclones.…”

A Region at Risk:

“…Based on a historic loss analysis using nightlight maps of the PRC coast, annual losses in the PRC for the upcoming decades are estimated to be $0.5 billion (Elliott, Strobl, and Sun 2015). Esteban, Webersik, and Shibayama (2009) have conducted several case studies for countries in the Asia and Pacific region using Monte Carlo simulation that model the magnification of the tropical cyclone hazard by the year 2085.…”