Valuing Seawall Protection in the Wake of Hurricane Ike Abstract This paper estimates the value of seawall protection in the wake of Hurricane Ike using a difference-in-difference and fixed-effects type quasi-experimental approach. The analysis is based on residential housing transactions in Galveston, Texas from 2000 to 2014. The results suggest a positive price premium of up to 22% for seawall protected homes. The positive effect is found to be the highest after the occurrence of Hurricane Ike. Although as memory fades away the effect began decreasing gradually, the price premium of seawall protection still persists six years after Hurricane Ike.

Regressivity in Public Natural Hazard Insurance: a Quantitative Analysis of the New Zealand Case Abstract Natural hazard insurance is almost always provided by the public sector (directly, or indirectly through public-private partnerships). Given this dominant role of the public sector in hazard insurance, and the importance of shocks in economic dynamics, it is surprising that equity issues have not faced more scrutiny with respect to the design of hazard insurance. The nature of the regressivity we quantify has not been previously identified. We provide a detailed quantification of the degree of regressivity of the New Zealand earthquake insurance program – a system that was designed with an egalitarian purpose. We measure this regressivity as it manifested in the half a million insurance claims that resulted from the Canterbury earthquakes of 2011. We suggest how this regressivity can be remedied with modifications to the programs’ structure, and point to how other insurance schemes internationally are likely to also be regressive.

The Synergies and Trade-Offs of Planned Adaptation in Agriculture: a General Equilibrium Analysis for Ethiopia Abstract Adaptation costs and finance are topical issues in many developing countries. In this study, we apply a computable general equilibrium (CGE) model to examine the economy-wide and regional effects of planned adaptation aimed at maintaining the current level of agricultural productivity in the face of climate change in Ethiopia. We derived the direct costs for planned adaptation in agriculture with respect to three alternative scenarios of climate change-induced productivity shocks of −5%, −10%, and − 15% under three adaptation policy effectiveness scenarios. The results show that such adaptation may require incremental public budget equivalent to 25–100% of the current public expenditure for adaptation relevant measures in agriculture. This will increase urban households’ welfare by 1% to 5% due to the incremental demand for skilled labor types. It will however reduce the government saving by 33% to 173%, and pull factors of production from the private sector which eventually decreases manufacturing output (by 2% to 10%), other private services (by 3% to 13%) and GDP of urbanized regions (by 0.2% to 3%). Such trade-offs may strain the current macroeconomic endeavors of the country, e.g. the aim to reduce fiscal deficits and the effort to foster structural transformation driven by public investment. Policies that promote urban and commercial agriculture may help to reduce the country’s reliance on rain-fed smallholder agriculture (and hence the need for planned adaptation) while fostering structural transformation.

Household Preferences for Managing Coastal Vulnerability: State vs. Federal Adaptation Fund Abstract People living in the coastal areas are highly vulnerable to the extreme weather events and climatic shocks. In this paper, we analyze households’ willingness to pay (WTP) for public adaptation funds to support proactive measures that would potentially minimize the extent of coastal vulnerability. Using split-sample dichotomous choice contingent valuation (CV) method, we investigate households’ preference for a state adaptation fund (SAF) versus a federal adaptation fund (FAF), lasting for either 5 or 10 years. We analyze more than 1200 randomly selected household responses from the counties of 10 Northeastern and Mid-Atlantic States that were adversely affected by a major hurricane (Sandy). From the annual estimates of median WTP, we observe that the households are willing to pay more for SAF ($68.37) than FAF ($27.35). The findings can provide inputs for policy evaluation to minimize coastal vulnerability, particularly to decide whether similar projects should be managed at the state or federal levels.

Economic Losses of Heat-Induced Reductions in Outdoor Worker Productivity: a Case Study of Europe Abstract European countries have experienced strong heat waves over the last two decades. The frequency and magnitude of such extreme weather events are expected to increase in the near future. Using an interdisciplinary approach, which combines meteorological, epidemiological and economic analyses, we assess the cost of heat-induced reductions in outdoor worker productivity in Europe caused by the heat waves in August of 2003, July of 2010, and July of 2015. We found that for the top ten most affected European countries, average direct economic losses in agriculture accounted for $59–90 per worker and for construction, it was $41–72 per worker. Direct economic losses were especially high in countries, such as Cyprus, Italy, and Spain. Social costs of heat-induced reductions in worker productivity in agriculture and construction account for an average of $2–3 per capita.

The Effects of Natural Disasters and Weather Variations on International Trade and Financial Flows: a Review of the Empirical Literature Abstract This review summarizes the empirical literature on the effects of natural disasters and weather variations on international trade and financial flows. Regarding the effects on trade, I summarize 21 studies of 18 independent research teams and show that there is a large diversity in terms of motivations, data sets used, methodologies, and results. Still, some overarching conclusions can be drawn. Increases in average temperature seem to have a detrimental effect on export values, mainly on manufactured and agricultural products. Given climate change, this finding is important when it comes to projecting long-term developments of trade volumes. Imports seem to be less affected by temperature changes. Findings on the effects of natural disasters on trade are more ambiguous, but at least it can be concluded that exports seem to be affected negatively by the occurrence and severity of disasters in the exporting country. Imports may decrease, increase, or remain unaffected by natural disasters. Regarding heterogeneous effects, small, poor, and hot countries with low institutional quality and little political freedom seem to face the most detrimental effects on their trade flows. The literature on international financial flows is more limited. This part of the review includes 12 empirical studies. All but one focus on the effect of disasters. The majority of these studies finds that remittances and foreign aid inflows increase slightly after disasters. Potential future research could analyze spillover effects (in terms of time, space, and trade networks), consider adaptation, and use more granular data.

Examining the Natural Environmental Hazards Over the Last Century Abstract The purpose of the paper is to present an extended literature review with statistical results on natural environmental hazards relying on data from the last 117 years (1900–2016). More specifically, inspired by a statement in Smith’s (1996) book “the rich lose their money but the poor lose their lives” in this study we detect the high-risk areas and correlate them with economic characteristics in an attempt to accept or reject the above statement. Particularly, we hypothesize that the most developed countries have high economic losses and that the least developed countries have great fatalities. In this way we examine if fatalities are proved to be significant in the least developed countries and the total economic damages are proved to be significant in the most developed countries. A number of graphical presentations come to strengthen the statistical results by using map visualization techniques.

Emergency Department Visits by and Hospitalizations of Senior Diabetics in the Three Years Following Hurricanes Katrina and Rita Abstract While prior studies have investigated health care utilization immediately following disasters, few have examined utilization beyond that period. We use individual-level U.S. Medicare claims data for three years prior to (2002–2004) and after (2006–2008) Hurricanes Katrina and Rita to investigate whether senior diabetics affected by the storms had a greater number of emergency department visits and days hospitalized in the three years following the storms. An event study was conducted using regression analysis that controlled for all fixed individual characteristics. While the 2006 and 2007 rates of increase in utilization were relatively similar across the control group and the two affected groups, in 2008 the affected groups exhibited substantially greater increases in both emergency department visits and days hospitalized. The differences correspond to an additional 380,907 days hospitalized and 21,583 emergency department visits in 2008. The results indicate that, in addition to short term effects previously estimated, disasters may have longer term effects on utilization of healthcare services. These potential effects suggest that improved post-disaster care may significantly reduce the healthcare costs of disasters.

Overadaptation to Climate Change? The Case of the 2013 Finnish Electricity Market Act Abstract In this paper, we put forward a definition of over-adaptation in disaster risk reduction (DRR) and climate change adaptation (CCA) projects. We detail an illustrative case in which the response to extreme weather risk while aligned with the goals of CCA, is implemented beyond the economically efficient scale. We undertake a cost-benefit analysis of the 2013 Finnish Electricity Market Act, enacted partially as a reaction to long, storm-induced electricity blackouts experienced after 2000. The Act imposes strict requirements on electricity distribution companies as regards the duration of blackouts. Meeting these requirements entails investments amounting to billions of euros. As a benefit, we quantify the avoided cost from the blackouts for households and producers. Our results, derived from Monte-Carlo simulations, show that for urban areas, the net expected value is positive. However, in rural areas less strict requirements could have been economically more efficient. Our results indicate that distributional impacts and correspondence between those who benefit and those who pay the costs should be taken into account in DRR and CCA policies that require large-scale investments. We also note that the population affected by a disaster may not accept DRR and CCA that are successful in terms of regulation and implementation. This applies when societal and individual preferences do not coincide.

Improving Understanding of Flood Risk: the Effects of Lowering the Cost of Accessing Flood Risk Information Abstract We provide evidence that lowering the cost of accessing flood risk information increases public understanding of the risk of flood events. We exploit a pair of events to generate this conclusion: in July 2008, the Brisbane City Council released property level flood risk reports online, and, in 2011, Brisbane suffered a flood event. Using a longitudinal property sales database and a difference in difference estimator, we refute existing results by finding that prices for at-risk properties fell by 2.5% after the release online of the flood-risk information. Second, after the flood event there was no change in value for at-risk properties that were not flooded in the 2011 event. This suggests that the flood event provided no new information about these properties, and therefore provides evidence that the flood-risk information had already been incorporated into property prices. We also investigate how the details of provided information matter. Specifically, we show that while different flood zones influence property prices, the height of expected floods does not.