Natural disasters: Macroeconomic implications and measurement issues

Studies examining the economic implications of natural disasters vary in nature partly because the types of disasters they cover, the periods of disaster, countries or locations of event, and the socioeconomic groups affected are different. Even with similar or same approaches to data collection and the way events are defined, measured, and modeled in analyses can affect the summary economic outcome of disasters. Large-scale destructions of properties and economic activities, as well as the loss of human life, suggest a negative effect of natural disasters on the economy, and on individuals, however, the extent of the effect, as well as the negativity of the effect, depends on the time of assessment and measurement. Evidence from meta-analyses confirms that natural disasters affect economic growth. The magnitude and the direction of the effect, however, depend on many other factors, including the time of measurement. Early assessments may show a depressive impact on economic growth as a result of the destruction experienced. Rebuilding and reconstruction activities may enter the national or regional macroeconomics accounting growth, which may mute the negative impact of the disaster. Consequently, some economies may rebound strongly in terms of economic growth with growth overshooting the predisaster growth trend. 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 the 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 publication bias.