Results of empirical studies on the impact of natural disasters on the economy

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Economists have been studying the impact of natural disasters of all kinds on the economy for years. The main conclusion of studies on direct effects is very intuitive: the short-term direct effects of natural disasters always have a negative impact on the economy. It is also not surprising that relatively greater material losses fall on more developed countries, where more expensive buildings and fixed assets can be destroyed, and that these costs increase over time, which can also be explained by indonesia whatsapp mobile number increasingly expensive infrastructure. Researchers also largely agree on the correlation that natural disasters cause fewer deaths in richer countries. However, there are doubts about the linearity of this relationship.

The results of studies on indirect effects are much more interesting. Climate disasters certainly have a negative impact on GDP growth dynamics, but the strength of the effect is not always directly proportional to the magnitude of the disaster and the relationship is not linear. Moreover, economic recessions are felt more in less developed countries. Studies on the impact of extreme weather events such as hurricanes show that they do not have a negative impact on all industries. Sectors such as agriculture, manufacturing or tourism are the most affected. In contrast, companies in the construction sector are positively affected, mainly due to the need to rebuild damaged infrastructure. This confirms the previous thesis on the possible, albeit limited, positive effects of natural disasters. Even more interesting conclusions were reached by economists (Leiter, Oberhofer and Raschky) who studied the consequences of floods in Europe. In many cases, employment and capital accumulation increased in the affected regions, while productivity remained unchanged. It is therefore reasonable to assume that in order to maintain productivity at pre-flood levels, firms had to increase investment and employment.



There is little research in the context of the long-term effects of natural disasters, mainly
due to data problems and the difficulty of isolating the impact of a single factor on a given indicator over a dozen or more years. However, what does exist shows that disasters also reduce economic growth rates in the years following the event.