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Long-term Growth Effects of Natural Disasters - Empirical Evidence for Droughts
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Long-term Growth Effects of Natural Disasters - Empirical Evidence for Droughts

Author

Listed:
  • Michael Berlemann

    (Helmut-Schmidt-University Hamburg)

  • Daniela Wenzel

    (Helmut-Schmidt-University Hamburg)

Abstract

The ongoing process of climate change goes along with a higher frequency and/or severity of droughts. While the short-term growth consequences of droughts are comparatively well examined, little research has yet been devoted to the question whether and how droughts affect medium and long-term growth. However, knowledge on the growth dynamics triggered by natural disasters is an influential input factor for integrated assessment models which are used to evaluate climate policy measures. In this paper we deliver empirical support for the hypothesis of the existence of long-run growth effects of droughts. Based on a panel of 153 countries over the period of 1960 to 2002 and employing a truly exogenous drought indicator derived from rainfall data we find significantly negative long-term growth effects of droughts in both highly and less developed countries. We also deliver first empirical evidence on the channels through which droughts affect economic growth.

Suggested Citation

  • Michael Berlemann & Daniela Wenzel, 2016. "Long-term Growth Effects of Natural Disasters - Empirical Evidence for Droughts," Economics Bulletin, AccessEcon, vol. 36(1), pages 464-476.
    • Handle: RePEc:ebl:ecbull:eb-15-00377
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    Cited by:

    1. Michael Berlemann & Daniela Wenzel, 2018. "Precipitation and Economic Growth," CESifo Working Paper Series 7258, CESifo.
    2. Muhammad Tariq Iqbal Khan & Sofia Anwar & Muhammad Rizwan Yaseen & Abdul Majeed Nadeem, 2022. "The Impact of Natural Disasters and Climate Change on Agriculture: An Empirical Analysis," Journal of Economic Impact, Science Impact Publishers, vol. 4(1), pages 28-38.
    3. Berlemann, Michael, 2016. "Does hurricane risk affect individual well-being? Empirical evidence on the indirect effects of natural disasters," Ecological Economics, Elsevier, vol. 124(C), pages 99-113.
    4. Michael Berlemann & Daniela Wenzel, 2016. "Hurricanes, Economic Growth and Transmission Channels - Empirical Evidence for Developed and Underdeveloped Countries," CESifo Working Paper Series 6041, CESifo.
    5. Samba Diop & Simplice A. Asongu & Vanessa S. Tchamyou, 2021. "Mitigating the Macroeconomic Impact of Severe Natural Disasters in Africa: Policy Synergies," Working Papers of the African Governance and Development Institute. 21/094, African Governance and Development Institute..
    6. Siriklao Sangkhaphan & Yang Shu, 2019. "The Effect of Rainfall on Economic Growth in Thailand: A Blessing for Poor Provinces," Economies, MDPI, vol. 8(1), pages 1-17, December.
    7. Nadia Benali (a) and Rochdi Feki (b), 2020. "The Relationship between Natural Disasters, Education, ICT and Economic Growth:Empirical Evidence from ARDL Bounds Testing Approach," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 45(4), pages 93-111, December.
    8. Hazem Krichene & Thomas Vogt & Franziska Piontek & Tobias Geiger & Christof Schötz & Christian Otto, 2023. "The social costs of tropical cyclones," Nature Communications, Nature, vol. 14(1), pages 1-13, December.
    9. Yu, Weihua & Hu, Jingjing & Deng, Chenchen, 2024. "Overflowing waters, diluted investments: The enduring impact of historical Yellow River floods on enterprise fixed assets investments," Journal of Asian Economics, Elsevier, vol. 92(C).
    10. Tran, Thi Xuyen, 2021. "Typhoon and Agricultural Production Portfolio -Empirical Evidence for a Developing Economy," VfS Annual Conference 2021 (Virtual Conference): Climate Economics 242411, Verein für Socialpolitik / German Economic Association.
    11. Daniela Wenzel, 2021. "Droughts and corruption," Public Choice, Springer, vol. 189(1), pages 3-29, October.
    12. Berlemann, Michael & Wenzel, Daniela, 2018. "Hurricanes, economic growth and transmission channels," World Development, Elsevier, vol. 105(C), pages 231-247.
    13. Berlemann, Michael & Eurich, Marina, 2021. "Natural hazard risk and life satisfaction – Empirical evidence for hurricanes," Ecological Economics, Elsevier, vol. 190(C).
    14. Wenzel, Daniela, 2018. "Droughts and Corruption," Working Paper 181/2018, Helmut Schmidt University, Hamburg.
    15. Nadia Benali and Kais Saidi, 2017. "A Robust Analysis of the Relationship between Natural Disasters, Electricity and Economic Growth in 41 Countries," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 42(3), pages 89-109, September.
    16. Krichene, H. & Geiger, T. & Frieler, K. & Willner, S.N. & Sauer, I. & Otto, C., 2021. "Long-term impacts of tropical cyclones and fluvial floods on economic growth – Empirical evidence on transmission channels at different levels of development," World Development, Elsevier, vol. 144(C).
    17. Tran, Thi Xuyen, 2021. "Typhoon and Agricultural Production Portfolio Empirical Evidence for a Developing Economy," Working Paper 188/2021, Helmut Schmidt University, Hamburg.
    18. Friedt, Felix L. & Toner-Rodgers, Aidan, 2022. "Natural disasters, intra-national FDI spillovers, and economic divergence: Evidence from India," Journal of Development Economics, Elsevier, vol. 157(C).
    19. Franziska Piontek & Matthias Kalkuhl & Elmar Kriegler & Anselm Schultes & Marian Leimbach & Ottmar Edenhofer & Nico Bauer, 2019. "Economic Growth Effects of Alternative Climate Change Impact Channels in Economic Modeling," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 73(4), pages 1357-1385, August.
    20. Vikrant Panwar & Subir Sen, 2019. "Economic Impact of Natural Disasters: An Empirical Re-examination," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 13(1), pages 109-139, February.

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    More about this item

    Keywords

    Climate change; natural disasters; droughts; economic growth;
    All these keywords.

    JEL classification:

    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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