The Causal Effect of Environmental Catastrophe on Long-Run Economic Growth: Evidence from 6,700 Cyclones
This National Bureau of Economic Research working paper uses meteorological data to reconstruct every country's exposure to tropical cyclones during 1950-2008 and employ random, within-country, year-to-year variation in cyclone strikes to identify the causal effect of environmental disasters on long-run economic growth. Findings indicate that exposure to tropical cyclones has a negative, long-term impact on national, regional, and global economic growth, refuting the notions that disasters can spur economic growth and/or that recovery efforts can eventually lead to a return to pre-disaster economic trends. These findings have significant implications for climate change projections and underscore the importance of disaster risk reduction, including early warning, not only as a protective measure, but also as a future revenue generating investment (see Summary and Discussion, pgs. 49-53).