Advertisement

Environmental and Resource Economics

, Volume 43, Issue 3, pp 333–350 | Cite as

Creative Disasters? Flooding Effects on Capital, Labour and Productivity Within European Firms

  • Andrea M. Leiter
  • Harald Oberhofer
  • Paul A. Raschky
Article

Abstract

This paper examines the impact of floods on the firms’ capital accumulation, employment growth and productivity by using a difference-in-difference (DID) approach and considering the firms’ asset structure. We find evidence that, in the short run, companies in regions hit by a flood show on average higher growth of total assets and employment than firms in regions unaffected by flooding. The positive effect prevails for companies with larger shares of intangible assets. Regarding the firms’ productivity a negative flood effect is observable which declines with an increasing share of intangible assets.

Keywords

Climate change Natural disasters Firm growth Productivity Difference-in-difference 

JEL Classification

D24 Q54 R10 C21 

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. Albala-Bertrand JM (1993) Natural disaster situations and growth: a macroeconomic model for sudden disaster impacts. World Dev 21(9): 1417–1434CrossRefGoogle Scholar
  2. Anbarci N, Escaleras M, Register CA (2005) Earthquake fatalities: the interaction of nature and political economy. J Public Econ 89(9–10): 1907–1933CrossRefGoogle Scholar
  3. Bloningen BA, Tomlin K (2001) Size and growth of Japanese plantes in the United States. Int J Ind Org 19(6): 931–952CrossRefGoogle Scholar
  4. Cabral LMB, Mata J (2003) On the evolution of the firm size distribution: facts and theory. American Economic Review 93(4): 1075–1090CrossRefGoogle Scholar
  5. Center for Research on the Epidemiology of Disasters (CRED) (2007) International disaster database. http://www.emdat.net—Universite Catholique de Louvain, Brussels
  6. Christensen JH, Christensen OB (2002) Severe summertime flooding in Europe. Nature 421: 805–806CrossRefGoogle Scholar
  7. Crespo-Cuaresma J, Hlouskova J, Obersteiner M (2008) Natural disasters as creative destruction? evidence from developing countries. Econ Inq 46(2): 214–226CrossRefGoogle Scholar
  8. Evans DS (1982) Tests of alternative theories of firm growth. J Pol Econ 95(4): 657–674Google Scholar
  9. Ewing BT, Kruse JB, Thompson MA (2003) A comparison of employment growth and stability before and after the fort worth tornado. Environ Hazards 5: 83–91CrossRefGoogle Scholar
  10. Ewing BT, Kruse JB, Thompson MA (2007) Twister! employment responses to the 3 May 1999 Oklahoma City Tornado. Appl Econ 1–12 (forthcoming)Google Scholar
  11. Federal Emergency Management Agency (FEMA) (2004) Using HAZUS-MH for risk assessment. http://wwwfemagov/library/viewRecorddo?id=1985
  12. Fotopoulus G, Louri H (2004) Firm growth and FDI: are multinationals stimulating local industry development?. J Ind Compet Trade 4(3): 163–189CrossRefGoogle Scholar
  13. Gibrat R (1931) Les Inequalities Economiques. Sirey, ParisGoogle Scholar
  14. Hallegatte S, Hourcade JC, Dumas P (2007) Why economic dynamics matter in assessing climate change damages: illustration on extreme events. Ecol Econ 62: 330–340CrossRefGoogle Scholar
  15. Halliday T (2006) Migration, risk, and liquidity constraints in El Salvador. Econ Dev Cult Chang 54(4): 893–925CrossRefGoogle Scholar
  16. Kahn ME (2005) The death toll from natural disasters: the role of income, geography and institutions. Rev Econ Stat 87(2): 271–284CrossRefGoogle Scholar
  17. Levinsohn J, Petrin A (2003) Estimating production functions using inputs to control for unobservables. Rev Econ Stud 70(2): 317–341CrossRefGoogle Scholar
  18. Llasat MDC, Rigo T, Barriendos M (2003) The Montserrat-2000 flash-flood event: a comparison with the floods that have occurred in the northeastern Iberian peninsula since the 14th Century. Int J Climatol 23: 453–469CrossRefGoogle Scholar
  19. Murlidharan TL (2003) Economic consequences of catastrophes triggered by natural hazards. PhD thesis, The John A. Blume Earthquake Engineering Center, Department of Civil and Environmental Engineering, Stanford University, StanfordGoogle Scholar
  20. Okuyama Y (2003) Economics of natural disasters: a critical review. Mimeo Regional Research Institute, West Virginia UniversityGoogle Scholar
  21. Olley S, Pakes A (1996) The dynamics of productivity in the telecommunications equipment market. Econometrica 64(6): 1263–1298CrossRefGoogle Scholar
  22. Parry ML, Canziani OF, Palutikof JP, van der Linden PJ, Hanson CE (2007) Climate change 2007: Impacts, adaption and vulnerability. Contribution of working group II to the fourth assessment report of the intergovernmental panel on climate change (IPCC). Cambridge University Press, New YorkGoogle Scholar
  23. Raschky PA (2007) Estimating the effects of risk transfer mechanisms against floods in Europe and USA: a dynamic panel approach. Working papers in economics and statistics No 2007-05, University of InnsbruckGoogle Scholar
  24. Risk Management Solutions (RMS) (2000a) UK Floods, Oct 2000. Catastrophe Event ReportGoogle Scholar
  25. Risk Management Solutions (RMS) (2000b) UK Floods, Nov 2000. Catastrophe Event ReportGoogle Scholar
  26. Rose A (2004) Economic principles, issues, and research priorities in hazard loss estimation. In: Okuyama Y, Chang SE (eds) Modeling spatial and economic impacts of disasters. Springer-Verlag, Berlin, pp 13–36Google Scholar
  27. Rose A, Liao SY (2005) Modeling regional economic resilience to disasters: a computable general equilibrium analysis of water service disruptions. J Reg Sci 45(1): 75–112CrossRefGoogle Scholar
  28. Rose A, Benavides J, Chang SE, Szczesniak P, Lim D (1997) The regional economic impact of an earthquake: direct and indirect effects of electricity lifeline disruptions. J Reg Sci 37(3): 437–458CrossRefGoogle Scholar
  29. Schröter D, Cramer W, Leemans R, Prentice IC, Araujo MB, Arnell NW, Bondeau A, Bugmann H, Carter TR, Gracia CA, de la Vega-Leinert AC, Erhard M, Ewert F, Glendining M, House IH Joanna, Kankaanpää S, Klein RJT, Lavorel S, Lindner M, Metzger MJ, Meyer J, Mitchell TD, Reginster I, Rounsevell M, Sabaté S, Sitch S, Smith B, Smith J, Smith P, Sykes MT, Thonicke K, Thuiller W, Tuck G, Zaehle S, Zierl B (2005) Ecosystem service supply and vulnerability to global change in Europe. Science 310: 1333–1337CrossRefGoogle Scholar
  30. Shughart WF (2006) Katrinanomics: the politics and economics of disaster relief. Public Choice 127(1–2): 31–53CrossRefGoogle Scholar
  31. Skidmore M, Toya H (2002) Do natural disasters promote long-run growth?. Econ Inq 40(4): 664–687CrossRefGoogle Scholar
  32. Sobel RS, Leeson PT (2006) Government’s response to hurricane katrina: a public choice analysis. Public Choice 127(1-2): 55–73CrossRefGoogle Scholar
  33. Sutton J (1997) Gibrat’s legacy. J Econ Lit 35(1): 40–59Google Scholar
  34. Tol RSJ, Leek FPM (1999) Economic analysis of natural disasters. In: Downing TE, Olsthoorn AA, Tol RSJ (eds) Climate, change and risk. Routledge, London, pp 308–327Google Scholar
  35. Wooldridge JM (2002) Econometric analysis of cross section and panel data. MIT-Press, Cambridge and LondonGoogle Scholar

Copyright information

© Springer Science+Business Media B.V. 2009

Authors and Affiliations

  • Andrea M. Leiter
    • 1
  • Harald Oberhofer
    • 1
  • Paul A. Raschky
    • 2
    • 3
  1. 1.Department of Economics, Faculty of Economics and StatisticsUniversity of InnsbruckInnsbruckAustria
  2. 2.Department of Public Finance, Faculty of Economics and StatisticsUniversity of InnsbruckInnsbruckAustria
  3. 3.alpS, Center for Natural Hazard ManagementInnsbruckAustria

Personalised recommendations