TY - JOUR
T1 - Multi-scale assessment of the economic impacts of flooding
T2 - Evidence from firm to macro-level analysis in the Chinese manufacturing sector
AU - Hu, Xi
AU - Pant, Raghav
AU - Hall, Jim W.
AU - Surminski, Swenja
AU - Huang, Jiashun
N1 - Funding Information:
Funding: This research was funded by the Asian Studies Centre at the University of Oxford and the European Commission ECOCEP Project. The authors, Raghav Pant and Jim W Hall, acknowledge the contribution of the Infrastructure Transitions Research Consortium (ITRC), which is funded by the UK Engineering and Physical Sciences Research Council (EPSRC) under two program grants EP/I01344X/1 and EP/N017064/1. Surminski would like to acknowledge the support from the UK Economic and Social Research Council (ESRC) through the Centre for Climate Change Economics and Policy (CCCEP) [grant number ES/K006576/1] and the Grantham Foundation for the Protection of the Environment. Jiashun Huang acknowledges support from the Swire Educational Trust, the GEMCLIME Project from the European Union’s Horizon 2020 Research and Innovation Programme (GA No. 681228) and the ITRC.
Publisher Copyright:
© 2019 by the authors.
PY - 2019/4/1
Y1 - 2019/4/1
N2 - We present an empirical study to systemically estimate flooding impacts, linking across scales from individual firms through to the macro levels in China. To this end, we combine a detailed firm-level econometric analysis of 399,356 firms with a macroeconomic input-output model to estimate flood impacts on China's manufacturing sector over the period 2003-2010. We find that large flooding events on average reduce firm outputs (measured by labor productivity) by about 28.3% per year. Using an input-output analysis, we estimate the potential macroeconomic impact to be a 12.3% annual loss in total output, which amounts to 15,416 RMB billion. Impacts can propagate from manufacturing firms, which are the focus of our empirical analysis, through to other economic sectors that may not actually be located in floodplains but can still be affected by economic disruptions. Lagged flood effects over the following two years are estimated to be a further 5.4% at the firm level and their associated potential effects are at a 2.3% loss in total output or 2,486 RMB billion at the macro-level. These results indicate that the scale of economic impacts from flooding is much larger than microanalyses of direct damage indicate, thus justifying greater action, at a policy level and by individual firms, to manage flood risk.
AB - We present an empirical study to systemically estimate flooding impacts, linking across scales from individual firms through to the macro levels in China. To this end, we combine a detailed firm-level econometric analysis of 399,356 firms with a macroeconomic input-output model to estimate flood impacts on China's manufacturing sector over the period 2003-2010. We find that large flooding events on average reduce firm outputs (measured by labor productivity) by about 28.3% per year. Using an input-output analysis, we estimate the potential macroeconomic impact to be a 12.3% annual loss in total output, which amounts to 15,416 RMB billion. Impacts can propagate from manufacturing firms, which are the focus of our empirical analysis, through to other economic sectors that may not actually be located in floodplains but can still be affected by economic disruptions. Lagged flood effects over the following two years are estimated to be a further 5.4% at the firm level and their associated potential effects are at a 2.3% loss in total output or 2,486 RMB billion at the macro-level. These results indicate that the scale of economic impacts from flooding is much larger than microanalyses of direct damage indicate, thus justifying greater action, at a policy level and by individual firms, to manage flood risk.
KW - China
KW - Flooding
KW - Indirect economic impact
KW - Manufacturing firms
KW - Natural disasters
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U2 - 10.3390/su1101933
DO - 10.3390/su1101933
M3 - Article
AN - SCOPUS:85064051349
SN - 2071-1050
VL - 11
JO - Sustainability (Switzerland)
JF - Sustainability (Switzerland)
IS - 7
M1 - 1933
ER -