Abstract
With the increased frequency of extreme weather events and large-scale disasters, extensive societal and economic losses incur every year due to damage of infrastructure and private properties, business disruptions, fatalities, homelessness, and severe health-related issues. In this article, we analyze the economic and disaster data from 1970 through 2010 to investigate the impact of disasters on country/region-level economic growth. We leveraged a random parameter modeling approach to develop the growth-econometrics model that identifies risk factors significantly influencing the country/region-level economic growth in the face of natural hazard-induced disasters, while controlling for country/region- and time-specific unobserved heterogeneities. We found that disaster intensity in terms of fatalities and homelessness, and economic characteristics such as openness to trade and a government’s consumption share of purchasing power parity (PPP), are the significant risk factors that randomly vary for different countries/regions. Other significant factors found to be significant include population, real gross domestic product (GDP), and investment share of PPP converted GDP per capita. We also found that flood is the most devastating disaster to affect country/region-level economic growth. This growth-econometrics model will help in the policy and decision making of governments related to the investment needs for pre- and post-disaster risk mitigation and response planning strategies, to better protect nations and minimize disaster-induced economic impacts.
Highlights
Our society and critical infrastructure systems are threatened with ever-increasing risks of climatic change leading to frequent extreme weather events such as coastal flooding due to sea-level rise, droughts and heatwaves owing to increasing global mean temperature, and other hydrometeorological hazards such as hurricanes, tropical cyclones, typhoons, among others (Mukherjee 2017)
We found that disaster intensity in terms of fatalities and homelessness, and economic characteristics such as openness to trade and a government’s consumption share of purchasing power parity (PPP), are the significant risk factors that randomly vary for different countries/regions
Natural hazard-induced disasters affect economic growth of countries/regions, but the effect varies over time
Summary
Our society and critical infrastructure systems are threatened with ever-increasing risks of climatic change leading to frequent extreme weather events such as coastal flooding due to sea-level rise, droughts and heatwaves owing to increasing global mean temperature, and other hydrometeorological hazards such as hurricanes, tropical cyclones, typhoons, among others (Mukherjee 2017). Typhoon Haiyan in the Philippines (2013), the Tohoku earthquake (2011), the Nepal earthquake (2015), and tsunamis in Japan (2011, 2014)—highlight the extent to which both high-income and low-income countries are vulnerable to natural hazard-induced disasters, facing critical challenges related to adaptation and disaster risk mitigation (Munich RE 2012; Katz 2013; Cadwalladr 2015; NASA 2016; Plyer 2016) These large-scale disasters witnessed thousands of fatalities, injuries, homelessness, infrastructure damages, and business disruptions, leading to extensive economic and societal loss. The warmer sea surface would lead to increased risk of turbulent tropical storms, coastal flooding, drought, and so on (Riebeek 2005)
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