Working Paper: CEPR ID: DP11010
Authors: Adriana Kocornik-Mina; Thomas K.J. McDermott; Guy Michaels; Ferdinand Rauch
Abstract: Does economic activity relocate away from areas that are at high risk of recurring shocks? We examine this question in the context of floods, which are among the costliest and most common natural disasters. Over the past thirty years, floods worldwide killed more than 500,000 people and displaced over 650,000,000 people. This paper analyzes the effect of large scale floods, which displaced at least 100,000 people each, in over 1,800 cities in 40 countries, from 2003-2008. We conduct our analysis using spatially detailed inundation maps and night lights data spanning the globe's urban areas. We find that low elevation areas are about 3-4 times more likely to be hit by large floods than other areas, and yet they concentrate more economic activity per square kilometer. When cities are hit by large floods, the low elevation areas also sustain more damage, but like the rest of the flooded cities they recover rapidly, and economic activity does not move to safer areas. Only in more recently populated urban areas, flooded areas show a larger and more persistent decline in economic activity. Our findings have important policy implications for aid, development and urban planning in a world with rising urbanization and sea levels.
Keywords: Climate Change; Flooding; Urban Recovery; Urbanization
JEL Codes: Q54; R11
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| flood occurrence (Q54) | economic activity decline (R11) |
| low elevation areas (Q15) | flood risk (Q54) |
| flood occurrence (Q54) | night light intensity (Q49) |
| night light intensity recovery (C22) | pre-flood levels (N93) |
| recently populated urban areas (R23) | larger and more persistent decline in economic activity (F44) |