Disasters and economic growth: evidence for Argentina

Abstract

Disasters pose a serious threat globally. In this paper we estimate the impact of disasters on economic growth at the district level for Argentina, for the period 1992–2013. Due to the lack of disaggregated GDP data, night light maps reported by the United States' National Oceanic and Atmospheric Administration (NOAA) are used as a proxy for economic activity. Disaster information comes from the records of the Disaster Inventory System (DesInventar), which include the full range of disasters, from mild to severe ones. A regression analysis is carried out considering a panel of districts, linking luminosity with disasters. We find that an additional disaster -weighted by its severity- is associated with a small though statistically significant reduction in the district's economic growth rate, specifically, of 0.53 percentage points in the year of its occurrence. This result is mainly driven by the impact of hydrological disasters. However, we find no evidence of persistence of this effect over time; on the contrary there seems to be a recovery in the following period. Given the methodological limitations due to data constraints, estimates found here probably constitute a lower bound of the true macroeconomic effect. Thus, further research on the topic is recommendable.