Short-, Medium-, and Long-Term Growth Impacts of Catastrophic and Non-catastrophic Natural Disasters

Abstract

Using disaster data from 1960, this paper examines the effects of natural disasters on economic growth. The analysis considers disaster effects by combining the following four dimensions: 1) short-, medium-, and long-term impacts, 2) disaster severity, categorized as catastrophic (CAT) or non-catastrophic (NCAT), 3) disaster type: hydro-meteorological, geophysical, and other specific disaster types, and 4) four income groups. The results show that the impacts of a disaster event on economic growth vary depending on the time frame, severity, disaster type, and income level. Overall, CAT disasters have negative impacts regardless of the time frame, while NCAT disasters may have positive impacts depending on the disaster type. The results also indicate that economic growth in lower-middle-income countries is most sensitive to natural disasters, but developed countries also experience negative impacts from CAT disasters.