Science Source

Solomon M. Hsiang, Amir S. Jina

National Bureau of Economic Research

Published date July 1, 2014

The Casual Effect Of Environmental Catastrophe On Long-run economic Growth

Utilizes Meteorological data from 6,700 cyclones to reconstruct every country's exposure to the universe of tropical cyclones during 1950-2008 to exploit random within-country year-to-year variation in cyclone strikes to identify the causal effect of environmental disasters on long-run economic growth
Compares each country's growth rate to itself in the years immediately before and after exposure, accounting for the distribution of cyclones in preceding years
Finds robust evidence that national incomes decline, relative to their pre-disaster trend, and do not recover within twenty years
Concludes that a 90th percentile event reduces per capita incomes by 7.4% two decades later, effectively undoing 3.7 years of average development, and thatclimate change will be roughly $9.7 trillion more expensive than previously thought