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Economic Impact of Natural Disasters: An Empirical Re-examination
Abstract
Natural disasters cause serious economic and human losses. Yet there remains ambiguity in the existing literature with regard to their impact on the economy at large. This study re-examines the relationship between natural disasters and economic growth. It aims to contribute to a fairly limited literature on the economy-wide and sector-specific consequences of natural disasters in the short-to-medium term (up to 5 years). Further, it examines whether the disaster impacts are dependent on a country’s level of development. Based on panel data consisting of 102 (29 developed and 73 developing) countries over the period 1981–2015, it looks at the growth effects of four types of natural disasters, namely, floods, droughts, storms and earthquakes that were explored using the system generalised method of moments (GMM) approach. The results indicate that natural disasters have diverse economic impacts across economic sectors depending on disaster types and their intensity. The study confirms the findings of previous studies that the economic impacts of natural disasters are statistically stronger in developing countries. These findings may stimulate the policymakers especially in developing countries to explore the efficacy of viable ex-ante disaster risk financing tools (such as insurance, micro-insurance and catastrophic bonds). This would not only safeguard population and physical assets but also ensure adherence to the sustainable development goals.
JEL Classification: Q54, O10
... During such events demand for health services increases rapidly. This surge in demand can overwhelm hospitals and healthcare facilities, causing shortages of medical supplies and personnel (Panwar & Sen, 2019;Uscher-Pines, 2009, p. 1). The sudden and unexpected healthcare needs caused by disasters strain the existing healthcare systems, often resulting in inadequate emergency medical interventions. ...
... Furthermore, disasters prompt the reassessment of health policies and the development of strategies for disaster situations. The delivery of healthcare services is reshaped during the post-disaster recovery phase (Islam & Khan, 2018;Panwar & Sen, 2019). Policies should be structured to encompass preparedness, response, and recovery phases for disasters. ...
... Natural disasters are inherently destructive, often causing significant property damage and, in severe cases, loss of life. Their impact disrupts communities, infrastructures, and economies, highlighting the need for effective disaster preparedness and mitigation strategies to reduce harm (Panwar & Sen, 2019). In other words, natural disasters are defined as sudden environmental events that disrupt people's standard way of life, evoke feelings of helplessness, and cause suffering. ...
... В результате землетрясения в 2010 г. погибло около 220 тыс. человек, или 2% населения (по оценке местных властей -еще больше), появилось около 1,5 млн перемещенных лиц [13,19], было разрушено или повреждено до 300 тыс. зданий. ...
... Модель компромисса между стоимостью защиты, запланированной компенсацией (страхованием) и некомпенсированным (остаточным) ущербом (остаточным риском). Вариант решения в трилинейной системе координат, в порядке возрастания силы природного стрессора: 1 -полная защита при отсутствии ущерба; 2 -небольшие разрушения полностью покрываются компенсацией (страховкой); 3 -значительные разрушения частично покрываются компенсацией (страховкой); 4 -полностью уничтоженный объект с относительно небольшим компенсационным (страховым) возмещением (составлено автором) 19 Как внешнюю помощь можно расценивать и федеральные налоговые льготы для пострадавших предприятий. Однако для самогó пострадавшего региона или муниципалитета предоставление собственных льгот является лишь формой перераспределения средств. ...
In Chapter 5, "The Economics of Natural Disasters and Catastrophes in the Context of the Adaptation Approach", Aleksey B. Elatskov discusses the economic aspects of natural disasters, such as: direct and indirect consequences, economic losses and damages, investments in disaster prevention, and some others. The author discusses how trade-offs between the cost of a facility and its resilience to disasters are made in the construction of facilities. The impact of the disasters themselves and disaster management activities on the regional economy is examined. It is noted that in some cases there is a paradoxical effect when such a tragic event becomes an economic stimulus. At the same time, the author proposes to consider the interaction between society and the natural environment, including disaster management, through the prism of the adaptation approach and adaptation strategies, the typology of which is presented in the Cross-SWOT matrix.
In book: Economy of Emergency Periods: Challenges and Responses. Disasters, Catastrophes, Wars, - ed. by O. N. Misko (editor-in-chief) and A. B. Elatskov. - St. Petersburg, Russia : NWIM RANEPA, 2025 (In Russian)
... Sometime a natural disaster has an ability to shake the country's economic itself. Sharma (Panwar & Sen, 2019) put forward data's between 2000 to 2005, stated that 300 million people lost their life around the world due to disasters, during 2010 to 2015 the maximum of loss for global economic was more than 700 billion US Dollar. (Botzen, Deschenes, & Sanders, 2019) explain the models which can be determined the impact of the country's economic because of natural disaster, the models are Theoretical model, Social Accounting matrices, Neo classical Growth theory, endogenous productivity, Regional model, Catastrophe Model etc. (Panwar & Sen, 2019) stated that the developed & developing country are affected by the natural disasters, this study show the direct loss in GDP was 0.22 & 0.13 in developing & developed countries. ...
... Sharma (Panwar & Sen, 2019) put forward data's between 2000 to 2005, stated that 300 million people lost their life around the world due to disasters, during 2010 to 2015 the maximum of loss for global economic was more than 700 billion US Dollar. (Botzen, Deschenes, & Sanders, 2019) explain the models which can be determined the impact of the country's economic because of natural disaster, the models are Theoretical model, Social Accounting matrices, Neo classical Growth theory, endogenous productivity, Regional model, Catastrophe Model etc. (Panwar & Sen, 2019) stated that the developed & developing country are affected by the natural disasters, this study show the direct loss in GDP was 0.22 & 0.13 in developing & developed countries. Mostly the developing countries are affected by the natural disasters, this study put forward 59.17 billion US Dollar loss was faced by developing country because of natural disasters. ...
The hotels & resorts are crucial service providers. This industry plays a significant role in satisfying travellers. The primary focus of this study is on business recovery plans following natural disasters that impact hotels & resorts. Data was collected from 2023 to 2024. This paper discusses the steps taken by hotels and resorts to overcome the impact of natural disasters. Also, it focuses on the issues faced by hotels & resorts during natural disasters. The questionnaire is designed to cover business profiles and recovery plans. 150 hotels and resorts were selected for the study from The Nilgiris district (Ooty, Coonoor, Kotagiri, and Gudalur). Percentage analysis is used to find business profiles of hotels & resorts. The sum & mean were used to calculate business recovery plans. Chi-Square tests were applied to find the relationship between the nature of business with disasters frequently encountered. Garret Score was used to find issues faced by hotels & resorts. The analysis reveals a close relationship between the nature of hotels & resorts and the issues faced during natural disasters. This study highlights the importance of safety measures in hotels & resorts, which significantly impact visitor satisfaction during and after disaster. Government programs and service quality improvements are effective steps taken by the government, hotels and resorts to restore business operations following natural disaster
... Natural disasters and their consequences • Natural disasters are increasing due to the climate crisis [1] • Natural disasters cause immense material and psychological damage [2] • Donations aid in reconstruction and mental health support, revitalizing the economy [3] • Understanding donor motivation and targeting specific groups is crucial for NGOs [4] • NGOs are using IT tools and data analysis to respond to these disasters! R&D KMO 2024 ...
... • Technical hurdles: Dynamic websites, changing structures, data access restrictions [1] • Legal hurdles: Terms of use, copyright infringement [2] • Ethical hurdles: Server overload, privacy concerns, data anonymization [3][4][5] Source: https://pixabay.com/photos/engineer-engineering-4925135/ by This is Engineering | Pixabay License: https://pixabay.com/service/license/ ...
The number of natural disasters has been rising for several
years. The resulting damage is immense, with developing countries being
hit the hardest. In order to support reconstruction, affected countries
depend on donations, whose collection and re-distribution is usually coordinated
by NGOs. For them to be able to collect donations in a more
targeted manner, they require, among others, a better understanding of
the effects different types of media have on the donation process and
respective donation success. Aiming to address a part of this need, the
work presented in this article examines the relationship between media
exposure and donor behavior. Our goal is to investigate the extent to
which media presence affects the number of donations. The presentation covers
the first step in this journey, reporting on the challenges we faced
when using the 2015 earthquakes in Nepal as a test-bed to automatically
collect media coverage from various sources.
... The described conceptualisation responds to researchers' attempts to develop conceptual and theoretical foundations, such as the works of Okuyama (2003) and Okuyama et al. (2004). In this regard, our approach has been extensively used in this literature with some variations in the established theoretical assumptions (Crespo Cuaresma et al. 2008;Hallegatte and Dumas 2009;Leiter et al. 2009;Lynham et al. 2017;Panwar and Sen 2019). To illustrate, Hallegatte and Dumas (2009) applied the NEDyM model, or Non-Equilibrium Dynamic Model, which extends the traditional Solow growth model by incorporating short-term dynamics and disequilibria. ...
... We demonstrate the application of the Solow-Swan model in a disaster situation in per capita terms following Okuyama (2003), who applies the model with labour-augmenting technological progress described by Barro and Sala-i-Martin (2004). This proposed model has been extensively used in disasters impacts literature (Crespo Cuaresma et al. 2008;Hallegatte and Dumas 2009;Leiter et al. 2009;Lynham et al. 2017;Panwar and Sen 2019). ...
Extensive literature has studied the economic impact of disasters. However, specific impacts on labour markets have received less attention. Using a massive earthquake (> 8.0 Mw) that struck Chile in 2010 and proprietary data from a Chilean online job board (4136 job postings published between 2008 and 2012), we examine changes in demand for Information and Communications Technologies, ICT, related labour as a proxy for technological upgrading, by assuming that ICT and related technologies drive much of the technical change in production. We implement a structural topic model to discover and estimate the difference in the prevalence of ICT and Construction labour, among others. Our results show that ICT labour does not change. In contrast, Construction labour significantly differed after the disaster, suggesting that reconstruction activities led to employment differences. Our results suggest that there was no substantive technological replacement following the earthquake.
... Natural disasters and other extreme events can profoundly impact populations worldwide, inflicting severe damage to national economies both directly and indirectly (Panwar and Sen, 2019;Botzen et al., 2019). The interdependence between energy and other critical infrastructure makes ensuring reliable electricity supply critical, not only for timely relief efforts but also for avoiding positive feedback loops in infrastructure deterioration (Berariu et al., 2015;Lo Prete and Blumsack, 2023). ...
This paper discusses the economic and legal challenges of price regulation in spot electricity markets during extreme events, taking the 2021 Texas winter storm as an example. The dual role of spot electricity prices (resource allocation and overall system reliability) in ERCOT's energy-only market resulted in allocating system reliability costs to load-shed consumers and spot electricity buyers, implying that complementary tools for covering system reliability costs should be sought. Further nuances are highlighted through a comparative qualitative analysis of value-of-lost-load pricing and anti-gouging legislation in the event context.
RePEc - https://mpra.ub.uni-muenchen.de/123964/2/MPRA_paper_123964.pdf
... They can be classified into various types, such as hurricanes, earthquakes, floods, droughts, and storms. These disasters can damage infrastructure, cause loss of lives, and cause economic repercussions (Panwar & Sen, 2018). Moreover, natural disasters can substantially impact various sectors, including agriculture, public health, and infrastructure (Yu & Wei, 2022). ...
... They can be classified into various types, such as hurricanes, earthquakes, floods, droughts, and storms. These disasters can damage infrastructure, cause loss of lives, and cause economic repercussions (Panwar & Sen, 2018). Moreover, natural disasters can substantially impact various sectors, including agriculture, public health, and infrastructure (Yu & Wei, 2022). ...
21st century: It brings disasters with increasing types, frequencies, and sizes. In today's world, where studies on sustainability have become a priority, every professional discipline has responsibilities and must determine strategies for how their profession will evolve. This study discusses the status of landscape architecture and urban design disciplines in disaster-prone Turkiye. To determine future strategies in education policies, it is necessary to decide on the current situation, especially the approaches in graduate education. In this context, determining the relationship between theses, which are the production of graduate education studies, and disaster-related issues is critical. In this study, a 9-stage evaluation method is defined. 22 disaster types were determined through literature reviews and expert opinions from the Landscape Architecture professional discipline. Considering the beginning years of graduate education in Landscape Architecture departments, a total of 2397 master's and doctoral theses conducted under the disciplines of Landscape Architecture and Urban Design between 2002 and 2023 were examined. The total number of theses and the rates produced regarding thematic disaster types were examined quantitatively according to years, keywords, universities, faculties, and global and national developments. (scrutinize) In this context, during the examinations, it was determined that there were deficiencies and inadequacies in the number and content of the theses, and general solution strategies for the future were introduced to eliminate these problems in the graduate theses examined. Graduate theses should be done in quality and quantity, providing innovation and having applicable and sustainable values.
... Effective disaster risk reduction (DRR) strategies and the construction of resilient systems require developing management tools based on integrated risk assessment (Peduzzi et al. 2009). Notably, a majority of worldwide disasters occur in developing countries, where the impacts tend to cancel out real growth (Long 1978;Panwar and Sen 2019). Residents in rural areas of Central Asia are particularly susceptible to natural hazards (Thurman 2011;Scaini et al. 2024). ...
Climate change among other biogeophysical and socioeconomic stressors affects livelihoods of poor farmers and pastoralists in the Pamir Mountains of Tajikistan. Here, women play an important role in agriculture despite facing challenges related to land ownership, child rearing, spousal migration, water management, lack of training, and exposure to natural hazards. Climate change exacerbates these challenges but is not constant nor well documented in this region. Women manage most of the 1.3 million kitchen gardens and some small dehkan farms scattered across the terrain, many of which are in confined valleys on debris fans that represent some of the only relatively flat land. These fans are highly vulnerable to periodic debris flows and snow avalanches with all 30 fans with farms in the lower Gunt River valley (below 3000 m) populated. While temperatures in the Pamir have increased from May through July since 1950, precipitation is more complex with some increases in June. These patterns affect hazard occurrence and water availability creating challenges for woman farmers and begging the need for granular climate assessments. Given little government support for woman farmers along with the male-dominated agricultural and water management sectors, international donors and NGOs need to increasingly support rural women as agents of climate change adaptation and mitigation by providing science-based solutions and effective training.
... The inherent unpredictability of disasters precludes the possibility of accurately predicting the extent of damage to people and property. It is possible for disasters to result in unintended losses to people and residential areas (Panwar and Sen, 2018). It is challenging to anticipate the extent of damage that may be caused by natural disasters (Madrigano et al., 2017). ...
The research was conducted with the objective of evaluating the disaster preparedness belief of students enrolled at the district centre, which is situated in an area characterised by a high risk of potential disasters. The descriptive study was conducted between 15 November 2023 and 15 February 2024 at the Vocational School in the Cerkes district of the Cankiri province. The study sample consisted of 195 students, 129 (66.2%) female and 66 (33.8%) male, who participated voluntarily. Data were collected via face-to-face interviews with the students. The data were collected using two instruments: a personal information form questionnaire and a “General Disaster Preparedness Belief Scale” (GDPBS). The statistical significance of the data was evaluated at the (p
... In the current scientific landscape, few recognized and operationally employed indices consider a wide range of interdisciplinary parameters necessary to thoroughly study the impacts of various hazards across different nations. Among these, the most widely used is the INFORM Index [29], while more recently developed indices include the Global Infrastructure Risk Model and Index (GIRI) [30] and the World Risk Index [31]. These indices primarily focus on assessing risk through its core components, namely hazard, vulnerability, and exposure, providing a broad analysis of overall risk levels. ...
The increasing frequency and severity of extreme natural events, along with their escalating impacts, highlight the urgent need for robust tools to assess and strengthen national capacities for disaster preparedness and recovery. In this context, this paper introduces one of these tools, called the Recovery Gap Index (RGI), a comprehensive composite index designed to quantify and evaluate the post-extreme natural event response and recovery capabilities at the country level. The tool addresses the need for a systematic approach to quantify resilience and evaluate the impacts of consecutive events on vulnerable areas. The RGI synthesizes data from three well-established indices: the World Risk Index, INFORM, and Global Infrastructure Risk Model and Index (GIRI), covering critical dimensions related to sociodemographic factors, infrastructure, governance, technology, and economic resilience. By extracting key parameters from these diverse indices and aggregating them, the RGI provides a detailed assessment of each nation’s ability to manage the aftermath of extreme natural events. The index findings reveal significant regional disparities in recovery capacities, with European countries exhibiting stronger resilience, whereas many African and Asian nations face substantial challenges. Furthermore, this study proposes several potential future enhancements, such as the incorporation of early warning systems and insurance coverage metrics, aimed at improving its accuracy and practical application. The RGI aims to be a valuable tool for policymakers, disaster management professionals, and stakeholders, enabling them to make informed decisions and implement targeted interventions to further enhance global disaster resilience.
... They can be classified into various types, such as hurricanes, earthquakes, floods, droughts, and storms. These disasters can damage infrastructure, cause loss of lives, and cause economic repercussions (Panwar & Sen, 2018). Moreover, natural disasters can substantially impact various sectors, including agriculture, public health, and infrastructure (Yu & Wei, 2022). ...
21st century: It brings disasters with increasing types, frequencies, and sizes.
... Additionally, the earthquake victims in this study experienced job/profession loss as another economic impact. The emergence of economic problems after natural disasters and the growth of these problems have also been shown in research (Lee et al., 2018;Panwar & Sen, 2019). Earthquakes can cause loss of homes, businesses, and agricultural assets, leading to economic difficulties and obstacles to earning a living (Marcussen, 2023). ...
Abstract
Background:
In the earthquake of magnitude 7.7 and 7.6 in Turkey on February 6, 2023, many buildings collapsed and many people suffered emotional and spiritual damage. It is important to understand the situations experienced by people who experienced the earthquake and to plan strategies according to these views in the future.
Objectives:
The aim of the study is to examine the preparations of people living in Hatay province before the earthquake, their experiences during the earthquake and their experiences after the earthquake in a qualitative design. Twenty-eight individuals (14 women and 14 men) between the ages of 18 and 65 years, who experienced the earthquake in Hatay, Turkey, participated in the study.
Result:
Participants were asked nine questions about before, during and after the earthquake using a semi-structured interview method. It was found that 32.1% of the participants made any preparations before the earthquake, all of them experienced the feeling of fear the most, 82.1% of them used prayer behavior instead of protective strategies during the earthquake, all of them were affected psychologically, socially, and economically, and 35.7% were physically affected.
Conclusion:
As a result of the analysis of participant opinions, it was seen that pre-earthquake preparation processes were insufficient, behaviors during the earthquake were not protective, and individuals and their environment were negatively affected after the earthquake.
... Additionally, natural disasters have diverse economic impacts across sectors, with developing countries experiencing more severe economic consequences. This necessitates effective disaster risk financing tools such as insurance and micro-insurance, according to Panwar and Sen (2019). ...
This study examines the impact of the Kahramanmaraş earthquake on the BIST100 index through the application of complex network analysis. The method begins by examining the correlation distance between the logarithmic returns of companies in the BIST100 index, which serves as the foundation for creating filtered weighted networks. This technique prioritizes robust financial connections while downplaying weaker ones, enabling a thorough examination of the network topological structure and identifying noteworthy financial interactions. The study employs a combination of global and local topological metrics, as well as structural entropy, to gain insights on the interconnections among markets in terms of public interest and the roles played by various entities. It demonstrates how exogenous shocks impact the network structure and reaction. Findings indicate initial notable alterations in the network framework, which were subsequently alleviated by the implementation of financial rules and market processes. This demonstrates the ability of financial markets to recover and maintain stability following a disaster. Results offer useful perspectives on the interplay between market dynamics and the resilience of the financial system in the presence of natural disasters.
... Küresel ısınmaya bağlı iklim değişikliğinden temelli doğa kaynaklı afetler, insanoğlunun baş etmesi gereken tehlikelerin en başında gelmektedir (3). Son yıllarda dünyada doğa kaynaklı afetlerin yoğunluğunda ve sıklığında bir artış yaşanmaktadır (4). Son on yılın verilerine bakıldığında oluşan doğa kaynaklı afetlerin çoğunluğunu seller oluşturmaktadır. ...
... Developed nations are more resilient to the economic shock associated with the damages Issues in Economics and Business ISSN 2377-23012024 from natural disasters but are also responsible for higher CO2 emission due to their industrial activities (Panwar & Sen, 2018;Raihan, 2023). Despite the role of the developed nations in the increase emission of greenhouse gases that enhance climate change, the developing nation are mostly at the receiving end of the impact considering that majority of the developed nations have higher capital income and disaster risk management systems, as such, they could easily cope with the economic consequence of these events (Raihan, 2023;Fomby et al., 2013;Loayza et al., 2012;Noy, 2009). ...
The paper explores the impact of climate change on global economic stability while also placing consideration on the role of economic policy towards the management of climate change risk. Climate change represents one of the pressing environmental challenges of the 21st century with profound repercussion on the economic stability while also affecting several sectors such as agriculture, energy, tourism and health. The increased rate of change in the climatic condition has led to a wide spread of severe weather conditions such as hurricanes, flooding, drought, tsunamis, wild fire etc. This has necessitated the need for a robust economic policy that would aid in the mitigation effort against the release of greenhouse gases into the atmosphere, as well as providing adaptation against the harmful impact of climate change. The role of the agreement of 2015 Paris frame work was examined as it provides an important foundation for global cooperation in the fight against climate change. It is expected that proper integration of financial institution and the private sector would provide the necessary funding and technical support that would aid in the implementation of green technology as well as promote sustainable development.
... Disasters offer serious challenges to the sustainable development of human society by disrupting human lives and economic structures (Zhou et al. 2014, Panwar and Sen 2019, de Azevedo Couto et al. 2023. During the last two decades, an estimated loss of 200 million lives and tens of billions of US dollars has been caused by different disasters (Botzen et al. 2019, Rao 2020. ...
... The landslides, debris flows, and glacial outburst floods (GLOFs) are mainly triggered due to heavy rainfall on hilly terrains, and can destroy transportation networks, infrastructure, and even entire communities (Peng et al. 2023). Natural disasters severely impact the developing countries causing significant human casualties and economic loss (Lacroix et al. 2020;Panwar and Sen 2019). The destructive potential of landslides has been increased with increasing intensity of severe weather conditions (Cappelli et al. 2021;Sim et al. 2022;Gómez et al. 2023). ...
A massive landslide occurred in Domeshi area, District Muzaffarabad, Pakistan, in two distinct phases: an initial movement on August 1, followed by complete failure on August 4, 2023. The landslide movement persisted for 96 h, with a runout distance of 500 m. The event destroyed numerous residential structures, impacting multiple families, and causing extensive damage to cultivated land and road infrastructure. To comprehensively understand the failure mechanisms, a detailed study was undertaken, encompassing site investigations, unmanned aerial vehicle (UAV) photography, geotechnical and geophysical investigations, petrographic analysis, kinematics, and numerical simulations. The field evidence indicates that the active deformation along the Jhelum Fault (JF) within the landslide’s main body weakened the surrounding rock formations. Intense rainfall saturated pre-existing fractures, creating critical zones of weakness. Highly plastic clays along fault plane contributed significantly to volume changes, especially during and after rainfall events. Kinematic analysis identified bedding joints as prevalent failure planes for planar sliding. Geophysical survey revealed a layer of unconsolidated material extending 25–30 m below the landslide’s scarp, accompanied by various fractures, including a deep fracture (i.e., JF) up to 300 m depth. Petrographic investigations showed microfractures, micro faults, and intragranular mineral breakage, indicative of intense tectonic stresses. Slope stability analysis indicated factors of safety (FoS) and strength reduction factor (SRF) less than 1, suggesting the potential for further failure in the lower sections of the landslide. Multiple factors, including slope geometry, active tectonics, material composition, and anthropogenic factors (i.e., slope loading and cutting for road and building construction, improper drainage distribution), contributed to the landslide's occurrence, however, the rainfall emerged as the primary triggering event.
... Estos eventos no solo causan daños directos, como la destrucción de infraestructuras y pérdida de vidas, sino que también tienen impactos indirectos, como la interrupción de servicios básicos, un fuerte impacto en la agricultura, la degradación ambiental y la pérdida de medios de subsistencia (Quesada-Román & Campos-Durán, 2023). Las consecuencias económicas son considerables, exacerbando la pobreza y la desigualdad socioeconómica en el país (Panwar & Sen, 2019). La apertura financiera, el crecimiento económico y el consumo de energía primaria aumentaron la degradación ambiental en las últimas décadas en Costa Rica, tanto en el corto como en el largo plazo, mientras que el consumo de energía renovable disminuyó (Koengkan et al., 2019). ...
El cambio global se refiere a las transformaciones y fenómenos interrelacionados que afectan diversos aspectos del Sistema Tierra y Costa Rica no escapa a esta realidad.
... Secondly, detrending facilitates the calibration and validation of drought indices and models by providing a standardized framework for assessing model performance against observed data. Moreover, detrending crop yield data enhances the interpretability and reliability of drought monitoring and early warning systems, enabling stakeholders to differentiate between short-term fluctuations in yield attributable to weather variability and longer-term trends driven by factors such as technological advancements, land use changes, and market dynamics [7,8]. ...
Detrending is a statistical technique that removes systematic variations or trends from time series data, allowing analysts to focus on the underlying patterns or fluctuations. While multiple detrending approaches have been applied but rarely discussed their consistency of outcomes and effectiveness in accurately capturing better yield trends. The validation of drought occurrences has proven to be a challenging task due to the non-stationary characteristics of time series data related to crop yield. This research utilizes time series of cotton yield data from the Marathwada region covering the period from 1998 to 2021. Three traditional trend models, including simple linear regression, second-order polynomial regression and central moving average were applied. Additionally, two machine learning models (random forest and support vector regression) were tested with a novel approach. Moreover, two decomposition models (additive and multiplicative) were used to remove non-linear trends in crop yield time series data. The performance of the chosen models was evaluated based on metrics such as root mean square error, mean absolute error, Nash-Sutcliffe efficiency, and index of agreement. The results suggest that the most effective detrending approach involves combining a random forest machine learning model with an additive decomposition model.
Natural hazards can result in a severe loss of human lives and have direct and indirect economic impacts. However, average effects may mask substantial differences across events and sectors. This paper examines two significant earthquakes that occurred in Italy in 2009 and 2012 to unveil the heterogeneous effects that such events may have. Employing the innovative Synthetic Difference-in-Differences method (SDID), we find that both earthquakes exhibit a positive impact on the total Gross Value Added (GVA). However, a granular analysis of disaggregated measures reveals not only variations between the two events but also distinct effects across specific sectors. This nuanced understanding highlights the importance of considering sector-specific dynamics in the aftermath of seismic events.
Purpose
Climate change is anticipated to lead to an increase in worldwide natural calamities, with a disproportionate impact on less-prepared developing nations that struggle to cope with these events. This study aims to evaluate the disaster response efforts of Fortune Global 500 multinational corporations (MNCs) from the information and communication technology (ICT) sector in developing countries from 2015 to 2019.
Design/methodology/approach
This study evaluates the disaster response efforts of Fortune Global 500 MNCs from the ICT sector in developing countries from 2015 to 2019, based on content analysis of 246 ( n ) sustainability reports using MAXQDA content analysis software.
Findings
Findings indicate a rise in ICT MNCs involvement, with response instances growing from 44 to 59, driven by cash donations (38%), in-kind contributions (38%) and partnerships, notably with the Red Cross (46%). These efforts underscore ICT’s critical role in enhancing disaster management efficiency and coordination. However, a significant geographical disparity emerges: the share of responses in developing countries declined from 77% to 25% of total efforts, whereas those in developed nations increased from 23% to 58%, with 40% concentrated in the USA and Japan between 2017 and 2019. Despite a 50% profit margin increase, resource allocation favors headquarters proximity over vulnerability.
Research limitations/implications
The study was carried over a period of five years to showcase a longer trend, studies including a longer time period would be beneficial. However, five years was sufficient to start understanding some of the trends, especially that 2017 was included, which was historically the most devastating and costly weather and climate disasters year. In addition, this research relied on the examination of sustainability reports, which are published by the MNCs themselves, and the validity of the information in these reports is variable. The self-reported data may understate efforts in developing countries or overstate corporate social responsibility (CSR) optics, risking bias as firms control disclosures. The MAXQDA content analysis, while robust, depends on keyword selection, potentially missing nuanced activities. These gaps suggest caution in generalizing findings, urging practitioners and researchers to scrutinize reporting transparency and data scope.
Practical implications
MNCs should develop clear and transparent strategies for disaster response that outline their commitment to both developed and developing countries. These strategies should be integrated into their broader CSR initiatives and consider the specific needs and vulnerabilities of different regions. Policymakers should encourage MNCs to engage in disaster response through incentives and partnerships. They should also work to create an enabling environment that facilitates the effective deployment of ICT for disaster management, particularly in developing countries. NGOs should proactively engage with ICT MNCs to leverage their resources and expertise. They should also explore ways to strengthen partnerships and collaboration to ensure a more coordinated and effective response to natural disasters.
Originality/value
This study calls for further research into these geographical disparities and the long-term impacts of corporate responses, urging a reevaluation of strategies to ensure balanced and sustained disaster support, particularly as global natural disasters are expected to increase due to climate change.
Çalışmanın amacı lisans öğrencilerinin afet risk algısını tanımlayıcı değişkenler çerçevesinde değerlendirmek ve öğrencilerde bu konuda farkındalık oluşturmaktır. Çalışma betimsel tarama modeli kullanılarak Burdur Mehmet Akif Ersoy Üniversitesi’nde öğrenim gören 472 lisans öğrencisine ulaşılmıştır. Kişisel Bilgi Formu ve Üniversite Öğrencileri Afet Risk Algısı Ölçeği yüz yüze anket yöntemiyle uygulanmıştır. Öğrencilerin afet risk algıları orta düzeydedir. Erkek, 18-21 yaş grubundaki, daha önce afet yaşayan ve afet eğitimi alan öğrencilerin afet risk algılarının anlamlı derecede daha yüksek olduğu saptanmıştır. Öğrencilerin sınıf düzeyleri ve fakülte türlerine göre afet risk algıları arasında istatistiksel olarak anlamlı farklılık bulunmuştur. Öğrencilerin afet risk algılarının artırılmasına yönelik girişimler kapsamında eğitim faaliyetlerinin düzenlenmesi faydalı olacaktır.
In sub-Saharan Africa (SSA), home gardening supports approximately 20% of household food needs, highlighting its significance in addressing food insecurity. This practice has emerged as a vital strategy for promoting sustainable community development in diverse ways. Using Bolgatanga, Ghana, as a case study, this study explores the socioecological and economic benefits of home gardening and their associations with socioeconomic characteristics. In total, 370 residents were interviewed, and the data was analyzed using descriptive and inferential statistics. The study revealed that home gardening provides environmental benefits, such as reducing temperature and erosion; social benefits, including enhanced well-being and cohesion; and economic benefits, such as reduced food costs and increased profits. The findings indicated statistically significant associations between environmental benefits, such as soil fertility enrichment (p < 0.01) and natural cooling (p < 0.01); social benefits, including stress reduction (p < 0.01); and economic benefits, such as sustainable living through composting (p < 0.01), and socioeconomic characteristics of respondents. The Relative Importance Index (RII) analysis identified biodiversity enhancement as the most significant environmental benefit, cost savings from homegrown food as the most important economic benefit, and stress reduction as the most significant social benefit. The study concludes that home gardening significantly contributes to sustainable community development through its environmental, social, and economic benefits, therefore it is essential for the Municipal Agriculture Department, non-profit organisations to collaborate with communities in terms of training programmes and resources for home gardening practices to maximize these benefits.
Climate change is one of the biggest crises facing humanity today, but the existing literature lacks discussion on the impact of climate change on economic development from the perspective of entrepreneurial activities. This study investigates the impact of climate change risks on entrepreneurship, distinguishing between short-term and long-term effects. Using data on firm dynamics, natural disasters, and financial institution presence, we find that climate-related disasters reduce firm entries and increase exits in the short term due to overreaction to immediate shocks. Long-term impacts involve increasing firm exits and decreasing firm survival rates. Areas with dense financial institutions show greater resilience, emphasizing the importance of financial infrastructure. Our findings highlight the importance of robust financial infrastructure in disaster-affected regions to support entrepreneurial resilience and economic stability.
Indoor vertical farming provides a sustainable solution for urban food production. However, achieving optimal conditions—specifically in airflow, temperature, and humidity—remains challenging. This review aims to explore recent advances in computational fluid dynamics (CFD) applications to enhance microclimate uniformity, supporting consistent climate control, pathogen mitigation, and efficient resource management in controlled environment agriculture (CEA). Key research questions include how CFD modeling can help to improve climate stability and resource use efficiency in multi-layer crop systems and plant factories.
This review synthesizes recent studies employing CFD for airflow and temperature optimization, vapor pressure deficit (VPD) assessment, and microclimate distribution with a focus on integrating plant physiology. Key strategies for numerical modeling of farm environments are also highlighted, including the governing equations, plant modeling techniques, and model validation methods.
CFD models have demonstrated potential in achieving uniform climate control across crop layers, optimizing energy usage, and enhancing microclimate stability within CEA systems. Effective sensor placement and tailored air distribution systems were shown to contribute significantly to consistent climate regulation and yield improvement.
Despite advances, challenges persist, including the need for broader crop variety adaptation, enhanced computational efficiency, and novel air distribution methods to improve climate consistency. This review underscores the role of CFD as an essential tool in promoting productivity and sustainability in indoor vertical farming through improved microclimate control and resource management.
In modern conditions, the risks that threaten the sustainable development of insurance are obvious. The downturn in times of crisis leads to a drop in the purchasing power of the population and suppresses insurance on Maslow’s hierarchy of needs. As a result, demand for insurance is falling. Unfair market behavior brings consolidation of capital in the insurance market and creation of monopolies endangering free market competition. The consequence of such trend is an enormous increase in insurance acquisition costs that jeopardize the adequacy of insurance premiums, and thus the security of payment of insurance benefits, which in the long run can lead to the collapse of sustainable development of the insurance market and loss of confidence in the insurance. Negative experience of policyholders in terms of insurance indemnity contri-butes to a further reduction in demand for insurance products. Such occurrences should be prevented by supervisory authorities.
Global insurance market experts are still analyzing the consequences of lockdown due to Covid-19 outbreak. At the same time they are looking for ways to increase the resilience of the insurance sector in case of future shocks due to pandemics. Insurance is based on the principles of diversification and solidarity when the costs of those affected by the economically harmful event are distributed to all insured against the risk that has occurred. However, the pandemic has affected all segments of the insurance market. This risk is difficult to diversify since almost everyone is affected. However it is estimated that the global insurance market could bear losses even above USD 100 billion, as most insurance companies would be able to meet their obligations thanks to reinsurance. Although it is unlikely that the consequences of the crisis caused by the corona virus infection will exceed the reserves of insurers, business entities will face certain difficulties as insurers will not rush to offer protection against production disruption due to a pandemic.
This chapter deals with risks that threaten the sustainable development of insurance in crisis conditions, including catastrophic risks, pandemic risk, financial and cyber risks. Special attention is paid to the macroeconomic environment that determines dynamics of the global insurance market. The chapter aims to indicate how insurance can contribute to risk management in crisis conditions, which is in the interest of not only sustainable development of this market, but also of overall economic, social and environmental development.
This study examines the relationship between environmental risks—such as hydrogeological hazards, landslides, volcanic zones, and earthquakes—and income inequality across Italian municipalities, using a comprehensive dataset from 2010 to 2020. Our analysis reveals that municipalities exposed to higher risks, particularly from hydrogeological and landslide hazards, exhibit significantly higher levels of income inequality. Conversely, earthquake risk, notably in Southern Italy, is associated with lower levels of inequality, likely attributable to its disproportionate impact on wealthier individuals, who are more susceptible to real estate and investment losses, further exacerbated by the economic uncertainty associated with such hazards. These findings underscore the importance of focused mitigation strategies and effective communication policies aimed not only at minimizing the physical impacts of these hazards but also at addressing the economic uncertainties they engender, thereby fostering more equitable economic outcomes.
In 2021, Winter Storm Uri severely affected several Texan agricultural sectors, including dairy production. To understand how dairy producers experienced this extreme weather event, this qualitative phenomenological case study explored perceptions of preparedness, coping strategies, and information needs and preferences for dealing with extreme weather events among dairy producers in Texas, conducting individual semi-structured interviews. The findings indicated that farmers felt unprepared to deal with extreme weather events and suffered significant economic losses due to this lack of preparedness. In response to winter storm Uri, dairy farmers modified traditional operations and management practices to mitigate negative impacts on farm labor, infrastructure, and herds. Our results, along with the existing literature on communication for extreme weather event management, highlighted that dairy farmers do not receive adequate information to effectively prevent and cope with similar occurrences in the future. Consequently, this study recommends exploring effective strategies to help agricultural producers develop plans to manage the effects of extreme weather events. Additionally, it integrates place-based, pluralistic, and demand-driven approaches to identify the best communication practices, enhance timely information dissemination on extreme weather, and strengthen the technical capacities of public and private entities, including Cooperative Extension Systems, as trusted resources for agricultural producers.
El presente documento ofrece un estudio de lasafectaciones del huracán Alex en México en 2010,considerado como el de mayor destrucción en México, enel medio siglo reciente. Para ello, se aplica unametodología basada en el análisis insumo-productomultirregional. Con el modelo se calculan los costoseconómicos directos e indirectos, tanto en la región deimpacto del fenómeno, como en el resto del mundo. Losresultados del estudio muestran que los costos indirectosrepresentan 20% de los costos totales y que, de talescostos indirectos, 15.6% ocurrió en el extranjero,principalmente en Estados Unidos, y 84.4% en elterritorio nacional.
Özellikle depremlerden sonra sıklıkla duyulan kalıplaşmış bir düşünce "deprem zarar vermez, zararı binalar verir" şeklindedir. Her ne kadar bir klişe olarak görülse de doğal afetler söz konusu olduğunda bu deyiş son derece mantıklı olmaktadır. Evrenin kanunları nedeniyle doğal afetlerin olması kaçınılmazdır, toplum için gerçek maliyeti yaratan bu afetlere ne kadar hazırlıklı olduğumuzdur. Dolayısıyla, afet kaynaklı zararların nedeni doğru-dan insanoğlunun yaptığı tercihler olmaktadır. Örneğin depremler söz konu-su olduğunda, binaların yapılacağı alanların seçimi, binaların yüksekliğinin seçimi, yapılarda kullanılacak malzemelerin seçimi, yapı, oturum, sigorta gibi organizasyonların nasıl ve ne şekilde yapılacağının seçimi gibi birçok tercih ekonomik maliyetler çıkarmakta ve bu tercihler daha sonrasında doğrudan daha büyük afet maliyetlerine dönüşebilmektedir. Kısacası, "doğal afet" kaçınılmazdır, ancak "afet" tamamen ekonomik bir tercih sorunudur ve bizzat bireylerin ve toplumların seçimlerinden kaynaklanmaktadır. Buna rağmen genellikle politikanın odak noktası doğal afetlerin doğal yanı üzerine olmakta, politikalar doğal afetin getirebileceği tehlikelerin önceden tahmini veya oluşabilecek tehlikelerin etki alanının nasıl sınırlanacağı üzerine odaklanan teknik önlemler üzerine olmaktadır.
Afet, toplumun tamamı veya belirli kesimlerinde fiziksel, ekonomik ve
sosyal kayıplara yol açan, altyapı ve üstyapıyı tahrip eden, normal yaşamı
ve insan faaliyetlerini durduran ya da kesintiye uğratan, etkilenen toplumun
baş etme kapasitesini aşarak acil müdahale gerektiren doğa, teknoloji
veya insan kaynaklı olayların yol açtığı büyük yıkım ve kayıplar olarak
tanımlanabilir. Afetlerin kesintiye neden olduğu temel alanlardan birisi
de eğitim-öğretim faaliyetleridir. Afetlerin eğitim ve öğrenme süreçlerinde
yarattığı etkiler ile afet sonrası eğitim faaliyetlerinin sürdürülebilirliği ve
afet eğitiminin toplumsal dirençliliğe katkısı değerlendirildiğinde, afetlerde
eğitim konusunun bilimsel olarak irdelenmesi gereken önemli bir alan
olduğu söylenebilir. Çünkü afetler, öğrencilerin okul devamlılığı, bilişsel
gelişim düzeyleri ve akademik başarılarında ciddi gerilemelere neden
olabilir. Bununla birlikte, toplumun afetler konusunda eğitimli olması ise afet
durumlarında yaşanabilecek olumsuz etkilerin en aza indirilmesine önemli
derecede katkı sunabilir. Afet eğitim planları ve programları; çocuklar,
engelliler, yaşlılar, hamileler gibi kırılgan gruplar başta olmak üzere tüm
paydaşları kapsayacak şekilde hazırlanmalı ve toplumun afetlere karşı
kırılganlığını azaltmayı hedeflemelidir. Bu doğrultuda, afet eğitiminin proaktif
bir yaklaşımla ele alınarak toplumsal farkındalığın artırılması, afet nedeniyle
zarar gören okul binalarının hızla yeniden inşasına odaklanılması, afet
dönemlerinde eğitim-öğretim faaliyetlerinin sürdürülebilirliğine ve afetlerin
olumsuz etkilerinin en aza indirilmesine katkı sunabilir. Ayrıca, eğitimöğretim
müfredatında temel afet bilgisi derslerine veya içeriklerine yer
verilmesi, afetlere karşı bireysel ve toplumsal dayanıklılığın artırılmasına
ciddi derecede katkı sağlayabilir.
Economic growth and development, as the primary goals of any country, play a crucial role in improving living standards and promoting sustainable development. Efforts to achieve these goals, and consequently increase per capita income, can ensure the enhancement of economic and social well-being of a nation. However, natural and political crises can pose significant obstacles to achieving such objectives. Natural disasters and economic sanctions, in particular, can have devastating effects on economic growth and development, leading to a decline in per capita income. Using the Dynamic Ordinary Least Squares, the present study aimed to examine the effect of economic sanctions and natural disasters on non-oil per capita income in Iran from 1980 to 2022. The findings showed that, in the long-term, increases in natural disasters and economic sanctions had contributed to a decline in per capita income in Iran. Additionally, environmental innovation and the interaction between innovation and natural disasters positively influenced per capita income. The results also indicated that factors such as the labor force, physical capital, and trade openness had contributed to improvements in per capita income. In light of the findings, it is recommended that Iran implement effective plans and policies to mitigate the effects of sanctions and natural disasters, promote environmental innovations, and strengthen the development of fixed capital and the labor force, aimed at ensuring the continued growth of per capita income.
While the effect of rainfall and temperature anomalies on migration is well documented in the literature, little is known about the impact of climate-change-induced extreme events, particularly drought, on migration among rural farm households in India. Moreover, moderating impact of non-farm activities and access to irrigation on drought-induced migration is also less explored. Our present study makes a novel contribution to fill this gap in the literature. Combining Round I (2004–2005) and Round II (2011–2012) of India Human Development Survey, we construct a large household level panel data to investigate first the impact of repeated drought events on migration. Second, we also estimate heterogeneous impact of drought on migration across households based on their participation in non-farm activities and access to irrigation. Employing difference-in-difference methodology, our results find evidence of drought-induced migration among rural farm households. However, no significant evidence of drought-induced migration was observed among households engaged in non-farm business activities and having access to irrigation. Implications of our empirical findings for disaster risk reduction are also discussed.
Natural disasters not only cause physical damage but also significantly impact the psychological well-being of victims. This is evident in Aek Natas District, Labuhanbatu Utara Regency, North Sumatra Province, where flash floods have resulted in both material and psychological losses. Unlike material losses, which people can recover through various efforts, psychological trauma is more challenging to address. A key figure in this context is the kiai or Tuan Guru. This study aims to examine the role of the kiai or Tuan Guru in restoring the psychological well-being of disaster victims in Aek Natas District, Labuhanbatu Utara Regency, North Sumatra Province. The research uses a qualitative approach. Data collection techniques include observing Tuan Guru's activities, conducting direct interviews with Tuan Guru Syeikh H. Syamsuddin Hasibuan, a local spiritual leader, and interviewing community members affected by the disaster. Additional data come from documents and records related to the disaster, which provide further context to the interview and observation results. The study finds that natural disasters cause psychological damage, such as trauma. Addressing the psychological needs of disaster victims, the role of Tuan Guru proves crucial. Tuan Guru H. Syamsuddin Hasibuan contributes to the psychological recovery of disaster victims in Aek Natas by offering spiritual guidance, providing emotional support through counseling, building community, and delivering training and education. The main contribution of this research is developing and implementing a community-based approach that integrates social support, education, and practical training as a holistic and adaptive strategy for psychological recovery.
This article provides a literature review of economic growth theories and identifies the implications of growth theories in addressing potential impacts of uncertain shocks, that is natural disasters. The extant literature seems inconclusive: some find positive effects of natural disasters on economic growth and others suggest either negative or no effect as such. Using a large panel dataset of 187 countries observed from 1960 to 2010, this article shows that the total number of people affected by floods significantly decreases the annual GDP per capita growth rate, whereas the death toll from floods has no substantial effect on the annual GDP per capita growth rate. One thousand in every one million people affected by floods decrease the GDP per capita growth rate by 0.005 %. This result is plausible, as floods are likely to create havoc in people’s livelihoods rather than claim a high human death toll. The article outlines future directions of research in the field of natural disaster augmented growth empirics.
Using a simple two-period model of the economy, we demonstrate the potential effects of natural disasters on economic growth
over the medium to long term. In particular, we focus on the effect of such shocks on investment. We examine two polar cases:
an economy in which agents have unconstrained access to capital markets, versus a credit-constrained version, where the economy
is assumed to operate in financial autarky. Considering these extreme cases allows us to highlight the interaction of disasters
and economic underdevelopment, manifested through poorly developed financial markets. The predictions of our theoretical model
are tested using a panel of data on natural disaster events at the country-year level, for the period 1979–2007. We find that
for countries with low levels of financial sector development, natural disasters have persistent negative effects on economic
growth over the medium term. These results are robust to various checks.
Significant progress has been made in recent years for modeling spatial economic impacts of disasters in a regional context (for example, Okuyama and Chang eds. Modeling the Spatial Economic Impacts of Disasters, forthcoming). While these advancements are more toward modeling strategies based on conventional frameworks, little has been dealt with the theory on economics of disasters, since the pioneering work by Dacy and Kunreuther (The Economics of Natural Disasters, 1969). In this paper, "The Economics of Natural Disasters" is reviewed and updated for providing a theoretical perspective toward disaster related research. The review is carried our through restructuring the framework of Dacy and Kunreuther with new findings from the recent studies and extending it to a regional context. In addition, the paper proposes the research directions for constructing further the theory on economics of disaster. Abstract: Significant progress has been made in recent years for modeling spatial economic impacts of disasters in a regional context (for example, Okuyama and Chang eds. Modeling the Spatial Economic Impacts of Disasters, forthcoming). While these advancements are more toward modeling strategies based on conventional frameworks, little has been dealt with the theory on economics of disasters, since the pioneering work by Dacy and Kunreuther (The Economics of Natural Disasters, 1969). In this paper, "The Economics of Natural Disasters" is reviewed and updated for providing a theoretical perspective toward disaster related research. The review is carried our through restructuring the framework of Dacy and Kunreuther with new findings from the recent studies and extending it to a regional context. In addition, the paper proposes the research directions for constructing further the theory on economics of disaster.
This paper has been prepared for policy makers interested in establishing or strengthening financial strategies to increase the financial response capacity of governments of developing countries in the aftermath of natural disasters, while protecting their long-term fiscal balances. It analyzes various aspects of emergency financing, including the types of instruments available, their relative costs and disbursement speeds, and how these can be combined to provide cost-effective financing for the different phases that follow a disaster. The paper explains why governments are usually better served by retaining most of their natural disaster risk while using risk transfer mechanisms to manage the excess volatility of their budgets or access immediate liquidity after a disaster. Finally, it discusses innovative approaches to disaster risk financing and provides examples of strategies that developing countries have implemented in recent years.
The aim of this paper is to examine the relation between a natural disaster situation and its potential effects on the growth rate of output, by means of a simple macroeconomic model, which is later applied as a demonstration to a sample of countries affected by major natural disasters in the last two decades. This quantitative application appears to support the model. The main conclusions are that capital loss is unlikely to have an important effect on growth and that a very moderate response expenditure may be sufficient to prevent the growth rate of output from falling. A general derived conclusion is that foreign and public disaster response may be better used to help actual victims and affected activities directly than to proceed on the rather unsound prima facie belief that the economy will be heavily affected by the disaster.
The last few years have seen a notable increase in the number of studies investigating the causes and effects of natural disasters in many dimensions. This paper seeks to review and assess available empirical evidence on the ex-post microeconomic effects of natural disasters on the accumulation of human capital, focusing on consumption, nutrition, education and health, including mental health. Three major findings come forward from this work. First, disasters appear to bring substantial damages to human capital, including death and destruction, and produce deleterious consequences on nutrition, education, health and many income-generating processes. Furthermore, some of these detrimental effects are both large and long-lasting. Second, there is a large degree of heterogeneity in the size – but not much in the direction – of the impacts on different socioeconomic groups. Yet, an empirical regularity across natural hazards is that the poorest carry the heaviest burden of the effects of disasters across different determinants and outcomes of human capital. Finally, although the occurrence of natural hazards is mostly out of control of authorities, there still is a significant room for policy action to minimize their impacts on the accumulation of human capital. We highlight the importance of flexible safety nets as well as the double critical role of accurate and reliable information to monitor risks and vulnerabilities, and identify the impacts and responses of households once they are hit by a disaster. The paper also lays out existing knowledge gaps, particularly in regard to the need of improving our understanding of the impacts of disasters on health outcomes, the mechanisms of transmission and the persistence of the effects in the long-run.
Natural disaster risk is emerging as an increasingly important constraint on economic development and poverty reduction. This paper first sets out the key stylized facts in the area-that the costs of disaster have been increasing, seem set to continue to increase, and bear especially heavily on the poorest. It then reviews the key economic issues at stake, focusing in particular on the actual and prospective roles of, and interaction between, market instruments and public interventions in dealing with disaster risk. Key sources of market failure include the difficulty of risk spreading and, perhaps even more fundamental, the Samaritan's dilemma: the underinvestment in protective measures associated with the rational expectation that others will provide support if disaster occurs. Innovations addressing each of these are discussed.
The sources of economic growth and development have been puzzling economists from the modern dawn of the profession. While the Solow-Swan neo-classical model dominated research on growth in the 1960s and 1970s, the 1980s saw the emergence of growth theories that disputed, largely on theoretical grounds, the Solow-Swan assumptions and conclusions. In this paper, we do not examine the determinants of the level of per capita income as an indication that a certain theory has better explanatory power. Rather, we focus on the dynamics of growth following external exogenous shocks (natural disasters). We argue that the data analysis we present suggests that the neoclassical model does not accord very well with the growth experience of developing countries.
This study investigates the complex link between natural disasters, individual behaviour – in the form of an individual’s risk-taking propensity and level of trust – and the demand for microinsurance. Developing countries are particularly vulnerable to the impacts of natural hazards and climate change as they affect their development processes and set back poverty reduction efforts. Using a unique data set for rural Cambodia based on a survey, experimental games and a discrete choice experiment, the study highlights the importance of perceptions, expectations and psychological factors in decision-making processes with substantial consequences for long-term economic perspectives and poverty alleviation.
The ongoing process of climate change goes along with a higher frequency and/or severity of droughts. While the short-term growth consequences of droughts are comparatively well examined, little research has yet been devoted to the question whether and how droughts affect medium and long-term growth. However, knowledge on the growth dynamics triggered by natural disasters is an influential input factor for integrated assessment models which are used to evaluate climate policy measures. In this paper we deliver empirical support for the hypothesis of the existence of long-run growth effects of droughts. Based on a panel of 153 countries over the period of 1960 to 2002 and employing a truly exogenous drought indicator derived from rainfall data we find significantly negative long-term growth effects of droughts in both highly and less developed countries. We also deliver first empirical evidence on the channels through which droughts affect economic growth.
In this study we examine the impact of large-scale natural disasters on economic development. A major obstacle in exploring this relationship is the poor data quality on GDP per capita in low-income countries, while at the same time more than 90% of all disasters that happen worldwide occur in these particular countries. To overcome this problem, we use data based on satellite images of the night-time light intensity in a specific country or region which is shown to be highly correlated with income per capita. After testing for the sensitivity of the results, our main findings suggest that natural disasters reduce the amount of lights visible from outer space significantly in the short run. To be more precise, we demonstrate that climatic and hydrological disasters cause a large drop in the luminosity in developing and emerging market countries, while geophysical and meteorological disasters decrease light intensity more in industrialized countries. It turns out that using reported real GDP per capita figures underestimates the true impact. Besides, a large part of the economic consequences of the natural events is explained by their regional impact. However, in the long run most of the disaster effect has disappeared. Finally, the impact of a disaster depends partly on the size and scope of the natural catastrophe, the geographical location, the degree of financial development of a country and the quality of the political institutions present.
Using a new data set on annual deaths from disasters in 73 nations from 1980 to 2002, this paper tests several hypotheses concerning natural-disaster mitigation. Though richer nations do not experience fewer natural disasters than poorer nations, richer nations do suffer less death from disaster. Economic development provides implicit insurance against nature's shocks. Democracies and nations with higher-quality institutions suffer less death from natural disaster. Because climate change is expected to increase the frequency of natural disasters such as floods, these results have implications for the incidence of global warming.
Cambridge Core - Environmental Policy, Economics and Law - Managing the Risks of Extreme Events and Disasters to Advance Climate Change Adaptation - edited by Christopher B. Field
This paper surveys the state of the economic literature examining the aggregate impacts of natural disasters. The paper reviews the main disaster data sources available, discusses the determinants of the direct effects of disasters, and distinguishes between short-and long-run indirect effects. The paper then examines some of the relevant policy questions and follows up with a survey of current projections about the likelihood of future disasters. The paper ends by identifying several significant gaps in the literature.
We use panel vector autoregression models to trace the dynamic response of output growth to flood shocks, using new data on large flood events in 135 countries between 1985 and 2008. Flood shocks tend to have a positive and significant average impact on per capita GDP growth. However, this effect is limited to developing countries and to moderate floods. The positive impact of floods is larger and more significant in the agricultural sector; while floods seem to have a direct effect on agricultural growth rates in developing countries, their effect on nonagricultural growth rates is mainly indirect. (JEL: O11, Q54)
Growth theory predicts that natural disasters should, on impact, lower GDP per capita. However, the empirical literature does not offer conclusive evidence. Most existing studies use disaster data drawn from damage records of insurance companies. We arguethat this may lead to estimation bias as damage data and the selection into the database may correlate with GDP. We build a comprehensive database of disaster events and their intensities from primary geophysical and meteorological information. In contrast to insurance data, our GeoMet data reveal a substantial negative and robust average impact effect of disasters on growth. The worst 5% disaster years come with a growth damage of at least 0.46 percentage points. That average effect is driven mainly by very large earthquakes and some meteorological disasters. Poor countries are more strongly affected by geophysical disasters; rich more by meteorological events. International openness and democratic institutions reduce the adverse effect of disasters.
When a model for panel data includes lagged dependent explanatory variables, then the habitual estimation procedures are asymptotically valid only when the number of observations in the time dimension (T) gets large. Usually, however, such datasets have substantial sample size in the cross-section dimension (N), whereas T is often a single-digit number. Results on the asymptotic bias (N → ∞) in this situation have been published a decade ago, but, hence far, analytic small sample assessments of the actual bias have not been presented. Here we derive a formula for the bias of the Least-Squares Dummy Variable (LSDV) estimator which has a approximation error. In a simulation study this is found to be remarkably accurate. Due to the small variance of the LSDV estimator, which is usually much smaller than the variance of consistent (Generalized) Method of Moments estimators, a very efficient procedure results when we remove the bias from the LSDV estimator. The simulations contain results for a particular operational corrected LSDV estimation procedure which in many situations proves to be (much) more efficient than various instrumental variable type estimators.
Using data for more than 160 countries in the period 1997 to 2010, we explore the impact of large-scale natural disasters on the distance-to-default of commercial banks. The financial consequences of natural catastrophes may stress and threaten the existence of a bank by adversely affecting their solvency. After extensive testing for the sensitivity of the results, our main findings suggest that natural disasters increase the likelihood of a banks’ default. More precisely, we conclude that geophysical and meteorological disasters reduce the distance-to-default the most due to their widespread damage caused. In addition, the impact of a natural disaster depends on the size and scope of the catastrophe, the rigorousness of financial regulation and supervision, and the level of financial and economic development of a particular country.
Using more than 750 estimates, we perform a meta-regression analysis of studies examining the relationship between economic growth per capita and natural disasters. The studies considered are very different with respect to the type of disasters considered, the sample of countries and time periods covered, model specification, estimators used and publication outlet. After extensive testing of our results, we conclude that there exists a negative genuine effect of natural disasters on economic growth which is increasing over the period of our analysis. Still, the magnitude differs across disasters included and country sample used. In particular, it turns out that climatic disasters in developing countries have the most significant adverse impact on economic growth. However, we also find some evidence that a part of the negative impact of natural disasters found in these studies is caused by a publication bias.
Our contribution is to show that the relationship between wealth and disasters is mainly formed by the exposure to disaster hazard. We first build a simple analytical model that demonstrates how countries that face a low hazard of disasters are likely to see first increasing losses and then decreasing ones with increasing economic development. At the same time, countries that face a high hazard of disasters are likely to experience first decreasing losses and then increasing ones with increasing economic development. We then use a cross-country panel dataset in conjunction with a hazard exposure index to investigate whether the data is consistent with the predictions from the model. In line with our model, we find that the relationship of losses with wealth crucially depends on the level of hazard of natural disasters faced by countries.
We consider pooling cross-section time series data for testing the unit root hypo- thesis. The degree of persistence in individual regression error, the intercept and trend coe3cient are allowed to vary freely across individuals. As both the cross-section and time series dimensions of the panel grow large, the pooled t-statistic has a limiting normal distribution that depends on the regression speci"cation but is free from nui- sance parameters. Monte Carlo simulations indicate that the asymptotic results provide a good approximation to the test statistics in panels of moderate size, and that the power of the panel-based unit root test is dramatically higher, compared to perform- ing a separate unit root test for each individual time series. ? 2002 Elsevier Science
There is an ongoing debate on whether disasters cause significant macroeconomic impacts and are truly a potential impediment to economic development. This paper aims to assess whether and by what mechanisms disasters have the potential to cause significant GDP impacts. The analysis first studies the counterfactual versus the observed gross domestic product. Second, the analysis assesses disaster impacts as a function of hazard, exposure of assets, and, importantly, vulnerability. In a medium-term analysis (up to 5 years after the disaster event), comparing counterfactual with observed gross domestic product, the authors find that natural disasters on average can lead to negative consequences. Although the negative effects may be small, they can become more pronounced depending mainly on the size of the shock. Furthermore, the authors test a large number of vulnerability predictors and find that greater aid and inflows of remittances reduce adverse macroeconomic consequences, and that direct losses appear most critical.
The process of global climate change has been associated with an increase in the frequency of climatic disasters. Yet, there is still little systematic evidence on the macroeconomic costs of these episodes. This paper uses panel time-series techniques to estimate the short and long-run impact of climatic and other disasters on a country's GDP. The results indicate that a climate related disaster reduces real GDP per capita by at least 0.6 percent. Therefore, the increased incidence of these disasters during recent decades entails important macroeconomic costs. Among climatic disasters, droughts have the largest average impact, with cumulative losses of 1 percent of GDP per capita. Across groups of countries, small states are more vulnerable than other countries to windstorms, but exhibit a similar response to other types of disasters; and low-income countries responds more strongly to climatic disasters, mainly because of their higher response to droughts. However, a country's level of external debt has no relation to the output impact of any type of disaster. The evidence also indicates that, historically, aid flows have done little to attenuate the output consequences of climatic disasters.
There has been a steady increase in the occurrence of natural disasters. Yet their effect on economic growth remains unclear, with some studies reporting negative, and others indicating no, or even positive effects. These seemingly contradictory findings can be reconciled by exploring the effects of natural disasters on growth separately by disaster and economic sector. This is consistent with the insights from traditional models of economic growth, where production depends on total factor productivity, the provision of intermediate outputs, and the capital-labor ratio, as well as the existence of important intersector linkages. Applying a dynamic Generalized Method of Moments panel estimator to a 1961-2005 cross-country panel, three major insights emerge. First, disasters affect economic growth - but not always negatively, and differently across disasters and economic sectors. Second, although moderate disasters can have a positive growth effect in some sectors, severe disasters do not. Third, growth in developing countries is more sensitive to natural disasters - more sectors are affected and the magnitudes are non-trivial.
Large natural disasters (LNDs) are ubiquitous phenomena with potentially large impacts on the infrastructure and population of countries and on their economic activity in general. Using a panel of 113 countries and 36 years of data, I examine the relationship between different measures of natural disaster impact and long-run economic growth. The sample is partitioned in two separate ways: According to the amount and type of disasters that countries have experienced and to the size of those disasters. For each partition, I present two sets of econometric estimations. The first regressions identify short-run and longer-lasting effects of LNDs. However, these first estimations do not distinguish between temporary but persistent effects and truly permanent ones. I thus estimate a structural model that allows me to identify permanent changes. The results of the first regressions show that for some of the groups of countries the disaster impact persists beyond the 2-5 years in which reconstruction and adaptation are expected to have an effect on the economy. However, the estimates using the structural model show that only for a very small number of countries which share a history of highly devastating natural disasters the negative effects are truly permanent.
Advanced economies have experienced a tremendous increase in material well-being since the industrial revolution. Modern innovations such as personal computers, laser surgery, jet airplanes, and satellite communication have made us rich and transformed the way we live and work. But technological change has also brought with it a variety of social problems. It has been blamed at various times for increasing wage and income inequality, unemployment, obsolescence of physical and human capital, environmental deterioration, and prolonged recessions. To understand the contradictory effects of technological change on the economy, one must delve into structural details of the innovation process to analyze how laws, institutions, customs, and regulations affect peoples' incentive and ability to create new knowledge and profit from it. To show how this can be done, Philippe Aghion and Peter Howitt make use of Schumpeter's concept of creative destruction, the competitive process whereby entrepreneurs constantly seek new ideas that will render their rivals' ideas obsolete. Whereas other books on endogenous growth stress a particular aspect, such as trade or convergence, this book provides a comprehensive survey of the theoretical and empirical debates raised by modern growth theory. It develops a powerful engine of analysis that sheds light not only on economic growth per se, but on the many other phenomena that interact with growth, such as inequality, unemployment, capital accumulation, education, competition, natural resources, international trade, economic cycles, and public policy.
This article develops a framework for efficient IV estimators of random effects models with information in levels which can accommodate predetermined variables. Our formulation clarifies the relationship between the existing estimators and the role of transformations in panel data models. We characterize the valid transformations for relevant models and show that optimal estimators are invariant to the transformation used to remove individual effects. We present an alternative transformation for models with predetermined instruments which preserves the orthogonality among the errors. Finally, we consider models with predetermined variables that have constant correlation with the effects and illustrate their importance with simulations.
We use disaster impact data over time to examine the degree to which the human and economic losses from natural disasters are reduced as economies develop. We find that countries with higher income, higher educational attainment, greater openness, more complete financial systems and smaller government experience fewer losses.
Natural disasters have a statistically observable adverse impact on the macro-economy in the short-run and costlier events lead to more pronounced slowdowns in production. Yet, interestingly, developing countries, and smaller economies, face much larger output declines following a disaster of similar relative magnitude than do developed countries or bigger economies. A close study of the determinants of these adverse macroeconomic output costs reveals several interesting patterns. Countries with a higher literacy rate, better institutions, higher per capita income, higher degree of openness to trade, and higher levels of government spending are better able to withstand the initial disaster shock and prevent further spillovers into the macro-economy. These all suggest an increased ability to mobilize resources for reconstruction. Financial conditions also seem to be of importance; countries with more foreign exchange reserves, and higher levels of domestic credit, but with less-open capital accounts appear more robust and better able to endure natural disasters, with less adverse spillover into domestic production.
Using panel data from rural Ethiopia, the article discusses the determinants of consumption growth (1989–1997), based on a microgrowth model, controlling for heterogeneity. Consumption grew substantially, but with diverse experiences across villages and individuals. Rainfall shocks have a substantial impact on consumption growth, which persists for many years. There also is a persistent growth impact from the large-scale famine in the 1980s, as well as substantial externalities from road infrastructure. The persistent effects of rainfall shocks and the famine crisis imply that welfare losses due to the lack of insurance and protection measures are well beyond the welfare cost of short-term consumption fluctuations.
External shocks, such as commodity price fluctuations, natural disasters, and the role of the international economy, are often blamed for the poor economic performance of low-income countries. This paper quantifies the impact of these different external shocks using a panel vector auto-regression approach and determines their contributions to output volatility in low-income countries. We find that they can only explain a small fraction of the output variance of a typical low-income country. Other factors, most likely internal causes, are the main source of fluctuations. From a quantitative perspective, the output effect of external shocks is typically small in absolute terms, but significant relative to the historic performance of these countries.
Estimation of the dynamic error components model is considered using two alternative linear estimators that are designed to improve the properties of the standard first-differenced GMM estimator. Both estimators require restrictions on the initial conditions process. Asymptotic efficiency comparisons and Monte Carlo simulations for the simple AR(1) model demonstrate the dramatic improvement in performance of the proposed estimators compared to the usual first-differenced GMM estimator, and compared to non-linear GMM. The importance of these results is illustrated in an application to the estimation of a labour demand model using company panel data.
It has been suggested that disasters might have positive economic consequences, through the accelerated replacement of capital. This possibility is referred to as the productivity effect. This effect is investigated using a model with embodied technical change. In this framework, disasters can influence the production level but cannot influence the growth rate, in the same way than the saving ratio in a Solow-like model. Depending on reconstruction quality, indeed, accounting for embodied technical change can either decrease or increase disaster costs, but is never able to turn disasters into positive events. Moreover, a better but slower reconstruction amplifies the short-term consequences of disasters, but pays off over the long-term. Regardless, the productivity effect cannot prevent the existence of a bifurcation when disaster damages exceed the reconstruction capacity, potentially leading to poverty traps.
The relationship between seasonal agricultural drought and detrended yields (within a period from 1961 to 2000) of selected crops was assessed in the conditions of the Czech Republic, which are to some extent representative of a wider area of Central Europe. Impact of water stress was analyzed using time series of yields for 8 crops (spring barley, winter wheat, grain maize, potato, winter rape, oats, winter rye and hay from permanent meadows) for 77 districts in the Czech Republic (average district area is 1025 km2). Relative version of Palmer’s Z-index (rZ-index or rZ-i) was used as a tool for quantification of agricultural drought. The monthly values of the rZ-index for each individual district were calculated as the spatial average (only for the grids of arable land). The study showed that severe droughts (e.g., in 1981 and 2000) are linked with significant reduction in yields of the main cereals and majority of other crops through the most drought prone regions. We found a statistically significant correlation (p ≤ 0.05) between the sum of the rZ-index for the main growing period of each crop and the yield departures of spring barley within 81% (winter wheat in 57%, maize in 48%, potato in 89%, oats in 79%, winter rye in 52%, rape in 39%, hay in 79%) of the analyzed districts. This study also defined the crop-specific thresholds under which a soil moisture deficit (expressed in terms of rZ-index) leads to severe impact at the district level. This can be expressed as the sum of the monthly rZ-index during the period of high crop sensitivity to drought; for spring barley it is −5, winter wheat −5, maize −9, rape −12, winter rye −10, oat −4, potato −6 and for hay −3. The length of the sensitive period is also crop-specific and includes the months that are important for the yield formation. The results show that yields of spring barley (and spring crops in general) are significantly more affected by seasonal water stress than yields of winter crops and hay from permanent meadows. The study proved that a severe drought spell during the sensitive period of vegetative season does have a quantifiable negative effect, even within more humid regions. These results demonstrate that, at least in some areas of the CR (and probably most of Central Europe), drought is one of the key causes of interannual yield variability.
This paper presents specification tests that are applicable after estimating a dynamic model from panel data by the generalized
method of moments (GMM), and studies the practical performance of these procedures using both generated and real data. Our
GMM estimator optimally exploits all the linear moment restrictions that follow from the assumption of no serial correlation
in the errors, in an equation which contains individual effects, lagged dependent variables and no strictly exogenous variables.
We propose a test of serial correlation based on the GMM residuals and compare this with Sargan tests of over-identifying
restrictions and Hausman specification tests.
This paper provides a description of the macroeconomic aftermath of natural disasters. It traces the yearly response of gross domestic product growth - both aggregated and disaggregated into its agricultural and non-agricultural components - to four types of natural disasters - droughts, floods, earthquakes, and storms. The paper uses a methodological approach based on pooling the experiences of various countries over time. It consists of vector auto-regressions in the presence of endogenous variables and exogenous shocks (VARX), applied to a panel of cross-country and time-series data. The analysis finds heterogeneous effects on a variety of dimensions. First, the effects of natural disasters are stronger, for better or worse, on developing than on rich countries. Second, while the impact of some natural disasters can be beneficial when they are of moderate intensity, severe disasters never have positive effects. Third, not all natural disasters are alike in terms of the growth response they induce, and, perhaps surprisingly, some can entail benefits regarding economic growth. Thus, droughts have a negative effect on both agricultural and non-agricultural growth. In contrast, floods tend to have a positive effect on economic growth in both major sectors. Earthquakes have a negative effect on agricultural growth but a positive one on non-agricultural growth. Storms tend to have a negative effect on gross domestic product growth but the effect is short-lived and small. Future research should concentrate on exploring the mechanisms behind these heterogeneous impacts.
This paper provides a survey on studies that analyze the macroeconomic effects of intellectual property rights (IPR). The first part of this paper introduces different patent policy instruments and reviews their effects on R&D and economic growth. This part also discusses the distortionary effects and distributional consequences of IPR protection as well as empirical evidence on the effects of patent rights. Then, the second part considers the international aspects of IPR protection. In summary, this paper draws the following conclusions from the literature. Firstly, different patent policy instruments have different effects on R&D and growth. Secondly, there is empirical evidence supporting a positive relationship between IPR protection and innovation, but the evidence is stronger for developed countries than for developing countries. Thirdly, the optimal level of IPR protection should tradeoff the social benefits of enhanced innovation against the social costs of multiple distortions and income inequality. Finally, in an open economy, achieving the globally optimal level of protection requires an international coordination (rather than the harmonization) of IPR protection.
Growth in this model is driven by technological change that arises from intentional investment decisions made by profit-maximizing agents. The distinguishing feature of the technology as an input is that it is not a conventional good or a public good; it is a nonrival, partially excludable good. Because of the noconvexity introduced by a nonrival good, price-taking competition cannot be supported. Instead, the equilibrium is one with monopolistic competition. The main conclusions are that the stock of human capital determines the rate of growth, that too little human capital is devoted to research in equilibrium, that integration into world markets will increase growth rates, and that a large population is not sufficient to generate growth. Copyright 1990 by University of Chicago Press.
In this article, we investigate the long-run relationships among disasters, capital accumulation, total factor productivity, and economic growth. The cross-country empirical analysis demonstrates that higher frequencies of climatic disasters are correlated with higher rates of human capital accumulation, increases in total factor productivity, and economic growth. Though disaster risk reduces the expected rate of return to physical capital, risk also serves to increase the relative return to human capital. Thus, physical capital investment may fall, but there is also a substitution toward human capital investment. Disasters also provide the impetus to update the capital stock and adopt new technologies, leading to improvements in total factor productivity. Copyright 2002, Oxford University Press.
[eng] Transportation costs and monopoly location in presence of regional disparities. . This article aims at analysing the impact of the level of transportation costs on the location choice of a monopolist. We consider two asymmetric regions. The heterogeneity of space lies in both regional incomes and population sizes: the first region is endowed with wide income spreads allocated among few consumers whereas the second one is highly populated however not as wealthy. Among the results, we show that a low transportation costs induces the firm to exploit size effects through locating in the most populated region. Moreover, a small transport cost decrease may induce a net welfare loss, thus allowing for regional development policies which do not rely on inter-regional transportation infrastructures. cost decrease may induce a net welfare loss, thus allowing for regional development policies which do not rely on inter-regional transportation infrastructures. [fre] Cet article d�veloppe une statique comparative de l'impact de diff�rents sc�narios d'investissement (projet d'infrastructure conduisant � une baisse mod�r�e ou � une forte baisse du co�t de transport inter-r�gional) sur le choix de localisation d'une entreprise en situation de monopole, au sein d'un espace int�gr� compos� de deux r�gions aux populations et revenus h�t�rog�nes. La premi�re r�gion, faiblement peupl�e, pr�sente de fortes disparit�s de revenus, tandis que la seconde, plus homog�ne en termes de revenu, repr�sente un march� potentiel plus �tendu. On montre que l'h�t�rog�n�it� des revenus constitue la force dominante du mod�le lorsque le sc�nario d'investissement privil�gi� par les politiques publiques conduit � des gains substantiels du point de vue du co�t de transport entre les deux r�gions. L'effet de richesse, lorsqu'il est associ� � une forte disparit� des revenus, n'incite pas l'entreprise � exploiter son pouvoir de march� au d�triment de la r�gion l
This paper investigates the impact of international migration on technical efficiency, resource allocation and income from agricultural production of family farming in Albania. The results suggest that migration is used by rural households as a pathway out of agriculture: migration is negatively associated with both labour and non-labour input allocation in agriculture, while no significant differences can be detected in terms of farm technical efficiency or agricultural income. Whether the rapid demographic changes in rural areas triggered by massive migration, possibly combined with propitious land and rural development policies, will ultimately produce the conditions for a more viable, high-return agriculture attracting larger investments remains to be seen.
This paper proposes unit root tests for dynamic heterogeneous panels based on the mean of individual unit root statistics. In particular it proposes a standardized t-bar test statistic based on the (augmented) Dickey–Fuller statistics averaged across the groups. Under a general setting this statistic is shown to converge in probability to a standard normal variate sequentially with T (the time series dimension) →∞, followed by N (the cross sectional dimension) →∞. A diagonal convergence result with T and N→∞ while N/T→k,k being a finite non-negative constant, is also conjectured. In the special case where errors in individual Dickey–Fuller (DF) regressions are serially uncorrelated a modified version of the standardized t-bar statistic is shown to be distributed as standard normal as N→∞ for a fixed T, so long as T>5 in the case of DF regressions with intercepts and T>6 in the case of DF regressions with intercepts and linear time trends. An exact fixed N and T test is also developed using the simple average of the DF statistics. Monte Carlo results show that if a large enough lag order is selected for the underlying ADF regressions, then the small sample performances of the t-bar test is reasonably satisfactory and generally better than the test proposed by Levin and Lin (Unpublished manuscript, University of California, San Diego, 1993).