Weather the storms? Resilience investment and production losses after hurricanes

Johan Brannlund, Geoffrey Dunbar, Reinhard Ellwanger and Matthew Krutkiewicz

Journal of Environmental Economics and Management, 2023, vol. 122, issue C

Abstract: This paper studies whether resilience investment mitigates damages from extreme weather events using data on offshore oil production in the Gulf of Mexico. We show that hurricanes which pass near rigs lower production and that stronger storms have larger impacts which persist for months. Regulatory changes that required rigs be designed to be resilient to major hurricanes only modestly mitigated the short-run production losses from hurricanes, reducing oil production losses by roughly 5% at 1 month and 20% 8 months after impact. They also only partly mitigated long-run losses, lowering the probability that a rig permanently exits production by 12–18 percentage points after a hurricane.

Keywords: Extreme weather; Resilience; Adaptation; Oil production (search for similar items in EconPapers)
JEL-codes: C22 C23 Q40 Q48 Q54 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeeman:v:122:y:2023:i:c:s0095069623001080

DOI: 10.1016/j.jeem.2023.102890

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