Economic Impact of Natural Hazards on Individuals and Businesses in New Zealand

Abstract

<p>This thesis contains three essays on the impact of extreme weather events on individual income and business firms in New Zealand. In Chapter Two, we investigate the impact of the extratropical cyclones on individual income, combining the data from Statistics New Zealand’s Integrated Data Infrastructure (IDI) and the weather-related insurance claims data from the Earthquake Commission, New Zealand. The study sample covers the administrative longitudinal panel data of all the IRD-registered individual taxpayers between 2010 and 2019. We estimate a set of panel regressions with individual and time-fixed effects to assess the impact of extratropical cyclones on the affected individual’s annual income. The study findings show that income from salaries and wages is negatively affected by the cyclones across various specifications. Chapter Three provides an empirical analysis of the impact of floods on individual income in New Zealand between 2000 and 2019. Data from Statistics New Zealand’s Integrated Data Infrastructure and Historical Weather Events Catalogue from the National Institute of Water and Atmospheric Research (NIWA) have been used to accomplish the study objective. The impact of floods on the affected individual’s annual income was assessed using panel regressions with individual and time-fixed effects. Despite the large floods-induced privately insured damages, floods had no significant impact on individual annual incomes from salary, wage, self-employment, and total income across various specifications. In Chapter Four, we investigate the impact of extratropical cyclones, floods, and wildfires on the profit and business equity of firms operating in New Zealand. We utilize a comprehensive administrative database of all firms from Statistics New Zealand’s Longitudinal Business Database from the financial year 2011- 2020 for extratropical cyclones and 2001-2020 for floods and wildfires. We find that the annual profit of extratropical cyclone-affected firms in agriculture, wholesale trade, financial and insurance services, and transportation sectors decreased significantly compared with the unaffected firms in the cyclone year. We also find that floods had no significant effect on the firm’s profit, and wildfires had no significant impact on the forestry firms’ profit. Besides, the study finding indicates no substantial evidence of the impact of extratropical cyclones, floods, and wildfires on the firms’ business equity.</p>