Pacific Islands Pacific Observatory, Monitoring Economic Activity by Nighttime Light Data: Nighttime Lights - Application for the Pacific

Abstract

This note provides a deep dive into the quality of nighttime lights (NTL) data for Pacific Island Countries (PICs). It explores their potential to generate and complement regional socio-economic statistics. NTL data has been widely used as a proxy of economic activity. It has been used to both disaggregate estimates of national economic output and predict economic growth. Although applying the first use case in PICs is technically feasible, validation is difficult given the lack of sub-national economic indicators. Previous studies show that the correlation between NTL and Gross Domestic Product (GDP) in the PICs is not strong enough to reliably predict national growth. Studies that have attempted to predict GDP based solely on regressions with NTL data have underestimated the economic output from small island states. Important industries such as agriculture, fishing, and tourism are not well captured by lighting intensity. Although NTL analysis tends to miss rural populations in most islands, the distribution of lights nonetheless holds valuable information to support poverty mapping exercises. A new methodology leveraging daily NTL data can generate disaggregated electrification rates across Pacific areas, with reasonable correlation to survey-derived electrification rates. Daily lights provide limited value to examine the spatio-temporal impacts and recovery from the volcanic eruption in Tonga. Most satellite observations from Visible Infrared Imaging Radiometer Suite (VIIRS) for the relevant period were affected by data quality issues. As this archive is relatively new, more case studies with different types of natural disasters need to be examined to provide a conclusive assessment of this novel application.