Abstract
This paper examines the current, lagged, and indirect effects of tropical cyclones on annual sectoral growth worldwide. The main explanatory variable is a new damage measure for local tropical cyclone intensity based on meteorological data weighted for individual sectoral exposure, which is included in a panel analysis for a maximum of 205 countries over the 1970–2015 period. I find a significantly negative influence of tropical cyclones on two sector aggregates including agriculture, as well as trade and tourism. In subsequent years, tropical cyclones negatively affect the majority of all sectors. However, the Input–Output analysis shows that production processes are sticky and indirect economic effects are limited.
Highlights
Tropical cyclones can have devastating economic consequences
Previous empirical studies on the relationship between economic development and tropical cyclone damage found a negative influence on GDP growth (e.g., Strobl 2011; Bertinelli and Strobl 2013; Gröger and Zylberberg 2016)
This study provides an explanation about which sectors contribute to an overall negative GDP-effect of tropical cyclones identified by previous studies (Noy 2009; Strobl 2012; Elliott et al 2015)
Summary
Tropical cyclones can have devastating economic consequences. They are among the most destructive natural hazards. From 1980 to 2018 tropical cyclones were responsible for nearly half of all natural disaster losses worldwide, with damage amounting to an aggregate of USD 2111 billion (Munich Re 2018). At least in some ocean basins (Elsner et al 2008; Mendelsohn et al 2012), and the higher exposure of people in large urban agglomerations near oceans (World Bank 2010), the overall damage and the number of people affected by tropical cyclones have been increasing since the 1970s (Guha-Sapir and CRED 2020). Tropical cyclones are and will continue to be a serious threat to the life and assets of a large number of people worldwide.
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