The Impact of a Large-Scale Natural Disaster on Local Economic Activity: Evidence from the 2003 Bam Earthquake in Iran

Mohammad Reza Farzanegan () and Sven Fischer

No 10502, CESifo Working Paper Series from CESifo

Abstract: This study provides new causal evidence for the impact of a large-scale natural disaster on local economic activity in Iran using nighttime light intensity. We apply the synthetic control method (SCM) and nighttime light (NTL) data from 1992 to 2020 for 31 provinces and 429 counties to study the impact of the 2003 Bam earthquake in the Iranian Kerman Province. According to the results and statistical inference tests for the SCM, Bam County and four neighboring counties experienced a statistically significant boost in economic activity in the years following the earthquake. This increase in local economic activity can be explained by the combination of several factors, such as an unprecedented inflow of national and international disaster relief during the reformist government of President Khatami, the political trust and mobilization of civil society in this period, the cultural importance of Bam, the severity of the earthquake, and the media attention. Additionally, economic activity in Bam County returns to its pre-disaster development path after seven years.

Keywords: natural disaster; natural hazard; synthetic control; earthquake; economic development; nighttime light; Iran; Bam (search for similar items in EconPapers)
JEL-codes: E01 H84 O11 O44 O53 Q51 Q54 R11 R12 (search for similar items in EconPapers)
Date: 2023
New Economics Papers: this item is included in nep-ara, nep-dev, nep-env, nep-geo and nep-ure
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Journal Article: The impact of a large-scale natural disaster on local economic activity: evidence from the 2003 Bam earthquake in Iran (2025)
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