The Price Impact of Extreme Weather in Developing Countries

2018/02/02 by Andréas Heinen, Jeetendra Khadan, Eric Strobl · 1 citation
Earth and Planetary Sciences · Agricultural and Biological Sciences · Environmental Science · #Tropical and Extratropical Cyclones Research #Agricultural risk and resilience #Flood Risk Assessment and Management

paper · doi:10.1111/ecoj.12581

Abstract

We examine the impact of extreme weather on consumer prices in developing countries by constructing a monthly data set of potential hurricane and flood destruction indices and linking these with consumer price data for 15 Caribbean islands. Our econometric model shows that the price impact of extreme weather events can be large. To illustrate potential welfare losses due to these price effects, we combine our estimates with price elasticities obtained from a demand system and with event probabilities for Jamaica. Our results show that while expected monthly losses are small, rare events can cause large falls in monthly welfare due to price increases.

Citations

• Statistics for near independence in multivariate extreme values

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• The Economic Impacts of Direct Natural Disaster Exposure

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