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- Droughts and Local Labor Markets. Studying Heterogenous Effects on Women
and Indigenous People in Chile-
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Abstract: Climate change is a pressing issue, affecting the lives of all people across the world. However, poorer and excluded communities are usually more affected, especially in low-income countries. Among them, women but particularly indigenous groups in rural areas seem to carry the bulk of the impacts produced by climate change and its many manifestations. We study the relationship between droughts and incomes and labor market outcomes in Chile over the period 1990–2017, focusing in particular on indigenous women. Our results show that overall indigenous women are the group most severely affected by droughts, decreasing their income, their probability of working in agriculture, and increasing their likelihood of working as an unpaid family worker or being out of the labor force. Results are robust to the use of different variables to measure droughts and to different econometric specifications. Our study corroborates the existence of marked heterogenous effects of climate change on different population groups and the vulnerability of indigenous communities to these shocks.
PubDate: 2023-06-02
- An Integrated Assessment of Climate Change Impacts and Implications on
Bonaire-
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Abstract: Bonaire’s topographic and geographic characteristics, in combination with the island’s high dependency on economic sectors that are susceptible to the impacts of climate change, make this Caribbean island particularly vulnerable to climatic changes. In this study, biophysical and economic models are combined and complemented with stakeholder consultation to assess and quantify environmental effects and associated socio-economic impacts of climate change on Bonaire. We apply three climate scenarios of the 2021 IPCC report (SSP1-2.6, 2–4.5, and 5–8.5) and combine them with local conditions to conduct a site-specific integrated assessment. The results show that various buildings, critical infrastructure, and identified tangible cultural heritage, especially at the south of Bonaire, are at risk of climate change induced coastal inundation by 2050, even under the least severe climate projection. In addition, the overall health of coral reefs declines under the climate scenarios SSP2-4.5 and SSP5-8.5 due to sea level rise, acidification, and increasing temperatures. In the most pessimistic scenario, Bonaire could experience a reduction in dive tourist arrivals of 118,000, which can lead to an economic contraction of 174 USDm (25%) in Bonaire’s GDP. In the absence of timely planning and implementation of adaptation measures, the impacts of climate change may have serious implications for inhabitants’ lifestyles and wellbeing. These results are imperative for various stakeholders, and stress that decision-makers should focus on the development and implementation of effective and feasible adaptation strategies urgently. Moreover, future researchers confronted with data scarcity in comparable contexts can utilise the novel methodologies employed in this study.
PubDate: 2023-05-29
- The Impact of Tropical Storms on International Trade: Evidence from
Eastern Caribbean Small Island Developing States-
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Abstract: Eastern Caribbean Small Island Developing States (SIDS) have a high dependence on international trade for income, employment, and poverty reduction given their extreme openness, small market size, narrow range of resources, and productive capabilities and specialized economic structures. These features make them vulnerable to external shocks, the most frequent being tropical storms. The objective of this paper is to investigate the impact of tropical storms on international trade for 8 Eastern Caribbean SIDS over the period 2000–2019, as well as the mediating role of the Real Effective Exchange Rate (REER). The paper uses panel regression techniques along with mediation analysis applied to monthly export, import, and exchange rate data taken from the Eastern Caribbean Central Bank combined with a measure of hurricane destruction that accounts for ex-ante economic exposure to damage. The results indicate that hurricanes reduce exports of goods by 20 percent in the month of a strike and up to three months thereafter. The impact on imports is more immediate and less severe, reducing imports of goods by 11 per cent only in the month of a strike. The mediation analysis suggests that the REER plays no mediation role in explaining the impact of tropical storm damage on exports and imports in the region.
PubDate: 2023-05-15
- Differential Fiscal Performances of Plausible Disaster Events: A Storyline
Approach for the Caribbean and Central American Governments under CCRIF-
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Abstract: Fiscal resilience against disasters is vital for the recovery in the aftermath of climate hazards. Without swift access to available funds for disaster relief, damages to human and the economy would be further exacerbated. How insurance may influence fiscal performance over time and can increase fiscal resilience for today and under a future climate has not been looked at yet in detail. Focusing on the Caribbean region and on the fiscal performance of governments after disaster events, we empirically analyze the effectiveness of the Caribbean Catastrophe Risk Insurance Facility (CCRIF) regarding the reduction of short-term fiscal effects. We embed this analysis within a novel climate impact storyline approach where we produce past plausible events and investigate the usefulness of insurance under such events. The storylines were modified according to global and climate change related boundary conditions to address the issue whether the CCRIF is fit for purpose or will need to be adapted in the future. We found that both hurricane strikes and the CCRIF affect fiscal outcomes of Caribbean countries. Furthermore, there are indications that CCRIF can counteract the negative fiscal consequences over the short term period induced by the disaster. Our analysis should shed some light on the current discussions on how development related assistance can be structured to enhance climate resilience in highly exposed countries for both direct and fiscal impacts of disasters.
PubDate: 2023-05-11
- International Evidence on Vaccines and the Mortality to Infections Ratio
in the Pre-Omicron Era-
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Abstract: Prior to the appearance of the Omicron variant, observations on countries like the UK that have accumulated a large fraction of inoculated individuals suggest that, although initially, vaccines have little effect on new infections, they strongly reduce the share of mortality out of a given pool of infections. This paper examines the extent to which this phenomenon is more general by testing the hypothesis that the ratio of lagged mortality to current infections is decreasing in the total number of vaccines per one hundred individuals in the pre-Omicron period, in a pooled time-series, cross-section sample with weekly observations for up to 208 countries. The main finding is that vaccines moderate the share of mortality from a given pool of lagged infections at sufficiently high levels of vaccination rates, which is essentially a favorable shift in the tradeoff between life preservation and economic performance. The practical lesson is that, in the presence of a sufficiently high share of inoculated individuals, governments can shade down containment measures, even as infections are still rampant, without significant adverse effects on mortality.
PubDate: 2023-04-06
- Losses from Fluvial Floods in Poland over the 21st Century – Estimation
Using the Productivity Costs Method-
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Abstract: This paper aims at the estimation of the impact of climate change on future losses caused by fluvial floods in Poland over the twenty-first century at the local level with the productivity costs valuation method. The daily data on river discharges published by (Piniewski et al., Hydrol Process 31:2210–2225, 2017), map of flood risk and value added generated in each county are used to estimate of the impact of climate change on the fluvial flood damage at the county level. This study supplements the findings of (Koks et al., Environ Res Lett 14:084042, 2019), (Alfieri et al., Clim Change 136:507–521, 2016) and (Feyen et al., Clim Change 112:47–62, 2012) with estimates of future flood losses in Poland using the productivity costs valuation that considers also the costs of disruptions of production chains and lost production at the finer level of spatial disaggregation. This method shows the overall increase in losses caused by fluvial floods in Poland due to climate change in comparison to the reference period of 1974–2000 by 47% in RCP4.5 and 83% in RCP8.5 scenario in 2024–2050 and by 32% in RCP4.5 and 51% in the RCP8.5 in 2074–2100.
PubDate: 2023-04-04
- Economic Activity, Fiscal Space and Types of COVID-19 Containment Measures
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Abstract: This paper argues that the type of COVID-19 containment measures affects the trade-offs between infection cases, economic activity and sovereign risk. Using local projection methods and a year and a half of high-frequency daily data covering 44 advanced and emerging economies, we find that smart (e.g. testing) as opposed to physical (e.g. lockdown) measures appear to be best placed to tackle these trade-offs. Initial conditions also matter whereby containment measures can be less disruptive when public health response time is fast and public debt is low. We also construct a database of daily fiscal announcements for Euro area countries, and find that sovereign risk is improved under a combination of large support packages and smart measures.
PubDate: 2023-04-04
- Settling insurance claims with cash or repair and housing market recovery
after an earthquake-
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Abstract: On the 22nd of February 2011, most houses in the city of Christchurch in New Zealand were damaged by an earthquake. Atypically for an earthquake, practically all were insured. We ask whether the way insurance claims were settled - in cash or through a managed repair program - was instrumental in mitigating the earthquake’s impact on the housing market. We use a genetic algorithm, which improves on a standard hedonic model, and identify the dynamics of the housing market in the city. We use four data sets: Housing market transactions, earthquake insurance claims paid by the public insurer, building consents issued by the local authority, and shake-maps measuring the intensity of the seismic shock. We find a negative correlation between insurance cash payouts and house prices after the earthquake, at the local level. We uncover evidence that suggests that the mechanism behind this result is that some damaged houses, for which claims were provided in cash, were not actually fixed. In contrast, damages that were actively repaired by the insurer did not lead to any relative deterioration in prices. This difference in the performance of the housing market post-disaster should be considered when insurers and their regulators decide how to settle claims in future disaster events.
PubDate: 2022-12-12
DOI: 10.1007/s41885-022-00122-w
- Lobbying, Time Preferences and Emission Tax Policy
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Abstract: We develop a theoretical model to study the combined effect of lobbying and time preferences on emission tax policies. With a two-period model, we show that the influence of lobbying, by dirty industries and by environmental organizations, on the equilibrium tax decreases with the time horizon of the policymakers. An extension of the model to four periods shows that social welfare maximising policymakers may implement a tax higher than the marginal cost in the first period to speed up the transition to green technology. A policymaker influenced by lobby groups may, however, do the opposite, because future lobbying income will decrease if more firms invest in green technology. The results of this study indicate that countries with powerful lobby groups and a short-sighted policymaker are not likely to implement the optimal carbon tax. The influence of lobbying in combination with time preferences may explain some of the diversity in carbon taxes that we observe in practice. The results lead to the policy recommendation to combine carbon taxes with trade policies, which create an incentive for short-sighted governments to participate in carbon pricing policies.
PubDate: 2022-12-12
DOI: 10.1007/s41885-022-00123-9
- Extreme Weather Events and Local Fiscal Responses: Evidence from U.S.
Counties-
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Abstract: This paper examines the impacts of floods and hurricanes on U.S. county government finances. Using a novel event study model that allows for heterogeneous treatment effects, we find that a flood or hurricane presidential disaster declaration (PDD) lowers tax revenue but increases government spending and intergovernmental revenues. Compared to flooding, hurricanes result in much larger repercussions on both revenues and borrowing. Our results also suggest disparate patterns of disaster-induced long-run fiscal impacts in counties with different socioeconomic conditions. Counties with lower incomes or greater social vulnerability tend to experience tax revenue losses and engage in more borrowing after a PDD, whereas higher-income counties see increased tax revenues and spending and also receive more intergovernmental transfers than their poorer counterparts.
PubDate: 2022-12-01
DOI: 10.1007/s41885-022-00120-y
- Public Investment in Hazard Mitigation: Effectiveness and the Role of
Community Diversity-
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Abstract: I estimate the loss-reducing effect of local public investments against natural hazards with new measures of damages, weather risk, and spending for a panel of 904 US coastal counties in 2000-2020. I distinguish federally- and county-funded projects and rely on a quasi-experimental strategy, matching counties by economic development, population, and weather risk. Risk predictions come from the Random Forest learning algorithm, using granular data on resident vulnerability and severe weather frequency. Public spending on adaptation is effective – the average high-spending county avoids a significant portion of losses – and efficient – $1 prevents up to $3 in losses over 20 years. The evidence suggests that federal spending is focused on high-risk areas, while local spending is effectively implemented in medium-risk counties. Finally, I show that fractionalization among residents about the priority of climate-change policy can be a limiting factor in adaptation spending. Total spending is significantly lower in areas with high diversity in policy preferences, and more so when opinions are equally split.
PubDate: 2022-11-18
DOI: 10.1007/s41885-022-00119-5
- The Relation Between Socioeconomic Status and Risk Attitudes: A Nuclear
Accident Scenario in Sweden-
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Abstract: Nuclear power plant (NPP) disasters are complex and dreaded scenarios. However, existing recovery plans presuppose that citizens will return to live in decontaminated areas following evacuation. Research on natural disasters has shown that high socioeconomic status (SES) influences people to continue living in their homes in recovery areas. This study examines the association between SES and citizens’ risk attitudes to a radiological emergency scenario and demonstrates instead that high SES implies a greater likeliness to move away from the accident-affected area. This is substantiated by survey data of Swedish citizens’ (N = 2,291) attitudes to a scenario where an NPP accident, evacuation, and remediation occur. More specifically, the study provides statistically significant results to show that high income is associated with less worry over ionizing radiation. Still, high-income individuals also appear to be more likely to move if their neighborhood is affected by radioactive fallout than low-income individuals. Moreover, the results for education show that low education is associated with remaining in the decontamination area, and the relation between education and worry over ionizing radiation provides some support for assumptions about the “anxious middle.” Overall, this study finds that decontamination is complicated by a majority of people preferring permanent relocation as well as by indications that more resourceful citizens are generally more likely to leave the area permanently, which may impede the fulfillment of state agencies’ plans for recovery.
PubDate: 2022-08-01
DOI: 10.1007/s41885-022-00118-6
- Flood Protection and Land Value Creation – Not all Resilience
Investments Are Created Equal-
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Abstract: This paper investigates the land value creation potential from flood mitigation investments in a theoretical and applied setting, using the urban area of Buenos Aires as a case study. It contributes to the literature on the wider economic benefits of government interventions and the dividends of resilience investments. Using a simple urban economics framework that represents land and housing markets, it finds that not all flood mitigation interventions display the same potential for land value creation: where land is more valuable (city centers for example), the benefits of resilience are higher. The paper also provides ranges for land value creation potential from the flood mitigation works in Buenos Aires under various model specifications. Although the estimates vary largely depending on model parameters and specifications, in many cases the land value creation would be sufficient to justify the investments. This result is robust even in the closed city configuration with conservative flood damage estimates, providing that the parameters remain reasonably close to the values obtained from the calibration. Finally, acknowledging that fully calibrating and running an urban simulation model is data greedy and time intensive – even a simple model as proposed here – this research also proposes reduced form expressions that can provide approximations for land value creation from flood mitigation investments and can be used in operational contexts.
PubDate: 2022-07-14
DOI: 10.1007/s41885-022-00117-7
- Weather Shocks, Population, and Housing Prices: the Role of Expectation
Revisions-
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Abstract: I provide new evidence about the information content of weather shocks in the US coastal states, based on substantial hurricane impacts, with a quasi-experimental research design that matches counties by risk, size, and income. I examine if hurricanes represent “new news” in counties with no prior hurricanes and if expectations updating is reflected in population and house price growth. I develop a measure reflecting homeowners’ flood risk expectation based on flood insurance deductible data, which assumes that higher deductibles reveal lower flood expectations. I find that population growth declines more in counties without previous hurricanes and that this is driven by areas with lower flood-risk priors, consistent with updating when the hurricane is more likely to be “new news”. This is supported by within-county evidence that directly controls for hurricane losses and residents’ priors. I find that information updating actually increases house price growth in impacted counties with no previous hurricanes.
PubDate: 2022-06-13
DOI: 10.1007/s41885-022-00116-8
- Insuring Well-Being: Psychological Adaptation to Disasters
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Abstract: We examine the impact of life and health insurance spending on subjective well-being. Taking advantage of insurance spending and subjective well-being data on more than 700,000 individuals in Japan, we examine whether insurance spending can buffer declines in subjective well-being due to exposure to mass disaster. We find that insurance spending can buffer drops in subjective well-being by approximately 3–6% among those who experienced the mass disaster of the great East Japan earthquake. Subjective health increases the most, followed by life satisfaction and happiness. On the other hand, insurance spending decreases the subjective well-being of those who did not experience the earthquake by approximately 3–7%. We conclude by monetizing the subjective well-being loss and calculating the extent to which insurance spending can compensate for it. The monetary value of subjective well-being buffered through insurance spending is approximately 33,128 USD for happiness, 33,287 USD for life satisfaction, and 19,597 USD for subjective health for a person in one year. Therefore, we confirm that life/health insurance serves as an ideal option for disaster adaptation. Our findings indicate the importance of considering subjective well-being, which is often neglected when assessing disaster losses.
PubDate: 2022-06-03
DOI: 10.1007/s41885-022-00114-w
- Economic Impact Payments and Household Food Insufficiency during COVID-19:
The Case of Late Recipients-
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Abstract: During the COVID-19 pandemic, the U.S. government distributed Economic Impact Payments (EIPs) to ease the economic hardships of American households. Using the Household Pulse Survey, we study the association of first-round EIPs with household-level food insufficiency in a sample of late recipients of EIPs. Studying the late recipients is important for two reasons, first, about 12 million eligible individuals did not automatically receive EIPs, and second, the late receipt of EIPs and the low-income status of late recipients allow us to tease out the relationship between EIPs and food insufficiency. We find that EIPs were associated with a 9.2 percentage points decrease in the likelihood of food insufficiency. However, households kept relying on free food acquisition to fight food hardship. Our results suggest that government efforts to provide more timely stimulus payments could be very impactful and significantly impact household food insufficiency.
PubDate: 2022-05-30
DOI: 10.1007/s41885-022-00115-9
- Correction to: Quantitative Evaluation of Flood Control Measures and
Educational Support to Reduce Disaster Vulnerability of the Poor Based on
Household‑level Savings Estimates-
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PubDate: 2022-05-12
DOI: 10.1007/s41885-022-00113-x
- Quantitative Evaluation of Flood Control Measures and Educational Support
to Reduce Disaster Vulnerability of the Poor Based on Household-level
Savings Estimates-
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Abstract: In developing countries, where budget constraints make it difficult to invest in disaster risk reduction, disasters worsen the poverty trap. To alleviate poverty by reducing the risk of disasters, not only the immediate direct impacts of disasters but also their long-term and indirect impacts should be considered. However, since the effects of individual policies are often evaluated based on the extent of damage reduction, the impact on the poor, who have few assets and thus small losses, is generally ignored. Here, we aimed to quantitatively evaluate the effects of flood control measures and educational support in terms of the flood vulnerability of the poor at the household level. We constructed a model to calculate the savings of individual households and used the flood damage-to-savings ratio to determine their flood vulnerability. Next, we estimated the extent to which the flood vulnerability is reduced by various policies. We found that educational support is suitable for reducing the flood vulnerability of the poor cost-effectively, especially when the budgets are small. Gini coefficient predictions confirmed that educational support is effective in reducing income inequality. The novelty of this study is that it quantitatively links flood damage, savings, and education, which are factors that affect the flood vulnerability of the poor, and it compares the effects of various flood control measures and educational support at the household level in terms of the flood vulnerability. While the model was developed using household survey data from Bago, Myanmar, the framework should be applicable to other regions as well.
PubDate: 2022-04-26
DOI: 10.1007/s41885-022-00112-y
- Bird’s Eye View of COVID-19, Mobility, and Labor Market Outcomes
Across the US-
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Abstract: COVID-19 dealt a formidable blow to the US economy. We present a joint analysis of the epidemiological and labor market outcomes across US states. We focus on the relationship across relevant indicators in the pre-vaccination era. As expected, we find strong correlation between changes in economic conditions and mobility. However, mobility fluctuations tend to be uncorrelated with local epidemics and occur simultaneously across most states. The magnitude of the mobility response is highly correlated with the rural vs. urban character of the area. Employment losses are most strongly associated with high population density and concentration of the leisure and hospitality industry. The relationship between job losses and the case fatality ratio is affected by the timing of the most severe COVID-19 waves.
PubDate: 2022-04-08
DOI: 10.1007/s41885-022-00110-0
- Four New Horsemen of an Apocalypse' Solar Flares, Super-volcanoes,
Pandemics, and Artificial Intelligence-
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Abstract: If economists have largely failed to predict or prevent the Global Financial Crisis in 2008, and the more disastrous economic collapse associated with the pandemic of 2020, what else is the profession missing' This is the question that motivates this survey. Specifically, we want to highlight four catastrophic risks – i.e., risks that can potentially result in global catastrophes of a much larger magnitude than either of the 2008 or 2020 events. The four risks we examine here are: Space weather and solar flares, super-volcanic eruptions, high-mortality pandemics, and misaligned artificial intelligence. All four have a non-trivial probability of occurring and all four can lead to a catastrophe, possibly not very different from human extinction. Inevitably, and fortunately, these catastrophic events have not yet occurred, so the literature investigating them is by necessity more speculative and less grounded in empirical observations. Nevertheless, that does not make these risks any less real. This survey is motivated by the belief that economists can and should be thinking about these risks more systematically, so that we can devise the appropriate ways to prevent them or ameliorate their potential impacts.
PubDate: 2022-01-15
DOI: 10.1007/s41885-022-00105-x
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