Estimating the direct and indirect impact of typhoons on plant performance: Evidence from Chinese manufacturers

Robert Elliott (), Yi Liu, Eric Strobl () and Meng Tong

Journal of Environmental Economics and Management, 2019, vol. 98, issue C

Abstract: We quantify the impact of typhoons on manufacturing plants in China. To this end we construct a panel data set of precisely geo-located plants and a plant-level measure of typhoon damage derived from storm track data and a wind field model. Our econometric results reveal that the impact on plant sales can be considerable, although the effects are relatively short-lived. Annual total costs to Chinese plants from typhoons are estimated to be in the range of US$ 3.2 billion (2017 prices), or about 1 per cent of average turnover. When we examine the channels by which plants react to a storm event we find that there is some buffering through an increase in debt and a reduction in liquidity. In terms of propagating the shock through foreign or domestic channels, our estimates suggest that plants prefer to reduce sales to domestic buyers more than foreign buyers and purchases from foreign rather than domestic suppliers. We also find some evidence of a negative indirect effect on turnover through spillovers from customers and a positive effect through damage to very nearby competitors.

Keywords: China; Typhoons; Wind field model; Plants; Economic impact (search for similar items in EconPapers)
JEL-codes: O17 O44 Q54 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (41)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeeman:v:98:y:2019:i:c:s009506961830651x

DOI: 10.1016/j.jeem.2019.102252

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