Economic losses from natural disasters have been increasing in recent decades. This has been attributed mainly to population and economic growth in disaster-prone areas. Future natural disaster ...losses are expected to increase due to a continued increase in economic exposure and climate change. This highlights the importance of designing policies that can mitigate the impacts of these disasters on the economy and society. A rapidly expanding literature has estimated the direct (e.g., property damage) and indirect (e.g., gross domestic product growth, trade) economic impacts of natural disasters. This article reviews this emerging literature. We synthesize the main theoretical, computational, and empirical methods used, summarize key findings on the economic impacts of natural disasters, and discuss factors that have been found to mitigate disaster impacts. We conclude by identifying lessons for policymakers and outlining an agenda for future research in this field.
•Empirical evidence of 141 incidences of past port disruptions across 27 events.•Ports disruptions have a median of 6 days with a 95th quantile of 22.2 days.•Ten day disruption in U.S.A. associated ...with a 35 m/s wind speed and/or 2.5 m storm surge.•All events cause simultaneous disruption at multiple ports.•Production recapture more likely than port substitution.
Ports are located in low-lying coastal and riverine areas making them prone to the physical impacts of natural disasters. The consequential disruptions can potentially propagate through supply chains, resulting in widespread economic losses. Previous studies to quantify the risks of port disruptions have adopted various modelling assumptions about the resilience of individual ports and marine network logistics. However, limited empirical evidence is available to validate these modelling assumptions or to provide deeper understanding of the ways in which operations are adapted during and after disruptions. Here, we use vessel tracking data to analyse past port disruptions due to natural disasters, evaluating 141 incidences of disruptions across 74 ports and 27 disasters. Results show a median disruption duration of six days with a 95th percentile of 22.2 days. All analysed events show multiple ports being affected simultaneously, challenging some of the studies that only focus on single port disruptions. Moreover, we find that the duration of the disruption scales with the severity of the event, with an increment of 1.0 m storm surge or 10 m/s wind speed associated with a two day increase in disruption duration. In contrast to commonplace assumptions in model studies, substitution between ports is rarely observed during short-term disruptions. On the other hand, production recapture happens in practice in many cases of port disruptions. In short, empirical vessel tracking data provides valuable insights for future modelling studies in order to better approximate the extent of the disruption and the potential resilience of the port and maritime network.
More than 100 natural disasters strike the United States every year, causing extensive fatalities and damages. We construct the universe of US federally designated natural disasters from 1920 to ...2010. We find that severe disasters increase out-migration rates at the county level by 1.5 percentage points and lower housing prices/rents by 2.5–5.0 percent. The migration response to milder disasters is smaller but has been increasing over time. The economic response to disasters is most consistent with falling local productivity and labor demand. Disasters that convey more information about future disaster risk increase the pace of out-migration.
Natural disasters have a statistically observable adverse impact on the macro-economy in the short-run and costlier events lead to more pronounced slowdowns in production. Yet, interestingly, ...developing countries, and smaller economies, face much larger output declines following a disaster of similar relative magnitude than do developed countries or bigger economies. A close study of the determinants of these adverse macroeconomic output costs reveals several interesting patterns. Countries with a higher literacy rate, better institutions, higher per capita income, higher degree of openness to trade, and higher levels of government spending are better able to withstand the initial disaster shock and prevent further spillovers into the macro-economy. These all suggest an increased ability to mobilize resources for reconstruction. Financial conditions also seem to be of importance; countries with more foreign exchange reserves, and higher levels of domestic credit, but with less-open capital accounts appear more robust and better able to endure natural disasters, with less adverse spillover into domestic production.
We examine the average causal impact of catastrophic natural disasters on economic growth by combining information from comparative case studies. For each country affected by a large disaster, we ...compute the counterfactual by constructing synthetic controls. We find that only extremely large disasters have a negative effect on output in both the short and the long runs. However, we also show that this results from two events where radical political revolutions followed the disasters. Once we control for these political changes, even extremely large disasters do not display any significant effect on economic growth.
Growth theory predicts that natural disasters should, on impact, lower GDP per capita. However, the empirical literature does not offer conclusive evidence. Most existing studies use disaster data ...drawn from damage records of insurance companies. We argue that this may lead to estimation bias as damage data and the selection into the database may correlate with GDP. We build a comprehensive database of disaster events and their intensities from primary geophysical and meteorological information. In contrast to insurance data, our GeoMet data reveal a substantial negative and robust average impact effect of disasters on growth. The worst 5% disaster years come with a growth damage of at least 0.46 percentage points. That average effect is driven mainly by very large earthquakes and some meteorological disasters. Poor countries are more strongly affected by geophysical disasters; rich more by meteorological events. International openness and democratic institutions reduce the adverse effect of disasters.
•We provide a new global database of the physical intensity of natural disasters.•Data based on damage reports lead to biased estimates of the disaster-growth nexus.•The new data strongly indicate negative growth effects of natural disasters.•Institutional quality and international openness mitigate the negative effects.
We examine how natural disasters affect the corporate environmental, social, and governance (ESG) disclosure policies of firms located close to disaster areas. We study firms located in counties ...neighboring those impacted by natural disasters and find that, on average, these firms increase their ESG disclosure transparency over the period subsequent to the disaster. Given that our sample firms are located outside of the area directly impacted by the disaster, the changes in disclosure transparency after the disaster are consistent with managers increasing their preference for transparency as their risk salience increases. Further, we find that firms with a higher percentage of local institutional ownership are more likely to increase ESG disclosure after experiencing nearby disasters. The findings suggest that managers strategically react to a change in investors' risk perception by increasing ESG disclosure.
•We review the literature on multicriteria optimization in humanitarian aid.•Application area: all phases of disaster management.•Objective functions are classified and discussed, as well as solution ...methods.•Available articles are presented and classified.•We conclude with an outline of future research directions.
In the recent past, the global public has been alarmed by several natural disasters with tremendous consequences. The OR/MS community has reacted by developing quantitative methods to support humanitarian aid, which have become well-established in the areas of disaster operations management and humanitarian logistics. An especially rapidly growing strand of literature in these areas uses multicriteria optimization methods, which is natural in view of the ubiquity of multiple objectives in disaster operations. The article reviews recent literature on the application of multicriteria optimization to the management of natural disasters, epidemics or other forms of humanitarian crises. Different optimization criteria as well as multicriteria decision making approaches applied in this field are discussed and examined. The available literature is classified according to several attributes, and each paper is presented in some detail. Possible future research directions are outlined.
Multi-market banks reallocate capital when local credit demand increases after natural disasters. Using property damage as an instrument for lending growth, we find credit in unaffected but connected ...markets declines by a little less than 50 cents per dollar of additional lending in shocked areas. However, banks shield their core markets because most of the decline comes from loans in areas where banks do not own branches. Moreover, banks increase sales of more-liquid loans and they bid up the rate on deposits in the connected markets. These actions help lessen the impact of the demand shock on credit supply.
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