The long-term consequences of natural disasters — A summary of the literature

Ilan Noy and William duPont IV

No 19397, Working Paper Series from Victoria University of Wellington, School of Economics and Finance

Abstract: The long-term economic impact of natural disasters is a subject that is highly debated among scholars. Several factors should be taken into consideration: These include the type and severity of natural disaster, the underlying wealth of the economy, and the total area of country impacted. Additionally, the way that researchers choose to define long-term impact, look at direct and indirect damage, and the availability of data also matters. Regardless of the method used there is still not a clear consensus concerning the long-term economic consequences of disasters. To discuss the long-term economic impact of natural disasters, one must first define impact. A common way to determine this impact is to compare the economy post disaster to the level it was at prior to the disaster. Some researchers argue that an economy has recovered when it returns to pre-disaster levels. This approach can be useful when comparing the impact in the short-term; however when analyzing the long-term impact it becomes problematic. Economies are constantly changing, and over long periods of time these changes will accumulate. Therefore one of the biggest challenges for researchers is to estimate what the level the economy would be at had the natural disaster not occurred. The way in which researchers go about doing this, can have a large impact on the results they find. Researchers have not reached consensus concerning the long-term consequences to natural disasters. Several authors have found very little to no impact, of natural disasters in the long-term, especially when using country level data. There have been some notable exceptions. Poor countries as well as small island nations have been found to be less resilient in the long-term. Studies using data collected at regional and local, have found a much more nuanced set of results regardless of wealth, income, or size.

Keywords: Economic impact; Long-run; Long-term growth; Recovery; Socio-economic; Natural disasters (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (6)

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