Natural disasters, aggregate trade resilience, and local disruptions: Evidence from Hurricane Katrina

Abstract

Natural disasters pose a constant threat to human life and economic activity. As evidence by research (see, e.g., Emanuel (2005)) and recent Hurricanes Florence and Michael, as well as the recordbreaking hurricane seasons of 2017 and 2020, the frequency and destructive force of these disasters continue to increase and adversely affect US coastal regions. According to the Centre for Research on the Epidemiology of Disasters (CRED), the frequency of these disasters has increased 10-fold since 1960 and today the global community experiences an average of 384 natural disasters per year, impacting close to 200 million people and causing annual average damages of around $162 billion (Guha-Sapir et al. 2015).

Assessing Risk to the National Critical Functions as a Result of Climate Change

“…The Gulf Coast and Atlantic coastline are anticipated to be most significantly affected. For example, for Maintain Supply Chains, hurricanes and tropical storms can affect supply chain operations by imposing temporary costs on consumers and producers through these storms' effects at coastal ports, temporarily delaying the delivery of goods, increasing logistical costs, destroying inventory, and disrupting the distribution of raw materials (Friedt, 2021;Friedt and Crispin, 2021;Sytsma, 2020).…”

“…Supply chains are vulnerable to several climate drivers because of their complicated logistic structure and reliance on coastal transportation infrastructure (Scholz et al, 2021). For instance, flooding of transport systems in the Midwest, tropical cyclone and hurricane damage to coastal ports on the Gulf Coast, and drought and extreme heat causing shipping delays along the Mississippi River waterway have caused disruptions to the flow of goods between producers and consumers (Austin, 2019;English et al, 2021;Friedt, 2021;Friedt and Crispin, 2021;National Integrated Drought Information System, undated;Sytsma, 2020;Trans-Border Global Freight Systems, undated). Generally, these disruptions have been regional and temporary and have had only modest impacts on supply chains at a national level (Friedt, 2021).…”

“…For instance, flooding of transport systems in the Midwest, tropical cyclone and hurricane damage to coastal ports on the Gulf Coast, and drought and extreme heat causing shipping delays along the Mississippi River waterway have caused disruptions to the flow of goods between producers and consumers (Austin, 2019;English et al, 2021;Friedt, 2021;Friedt and Crispin, 2021;National Integrated Drought Information System, undated;Sytsma, 2020;Trans-Border Global Freight Systems, undated). Generally, these disruptions have been regional and temporary and have had only modest impacts on supply chains at a national level (Friedt, 2021). However, as such climate drivers as floods and tropical cyclones and hurricanes become more intense in the next century, disruptions could grow to the point at which supply chains fail to meet routine operational needs in vulnerable regions and industries (Woetzel et al, 2020).…”

“…However, as such climate drivers as floods and tropical cyclones and hurricanes become more intense in the next century, disruptions could grow to the point at which supply chains fail to meet routine operational needs in vulnerable regions and industries (Woetzel et al, 2020). In cases in which climate drivers force shippers to substitute alternative ports (Friedt, 2021), demand surges could cause additional delays if demand for port services outpaces port capacity. Additionally, crucial coastal seaports are vulnerable to extreme tides and sea-level rise, which are predicted to cause disruptions to international trade flows in the United States and globally (Becker, Acciaro, et al, 2013;Becker, Ng, et al, 2018;Christodoulou, Christidis, and Demirel, 2019;Izaguirre et al, 2021).…”

“…These disruptions will likely be highly regional, although they could have repercussions nationally through prices of supply chain-reliant goods and services (Chopra and Sodhi, 2014). Tropical cyclones and hurricanes and flooding currently cause relatively minimal disruption to national supply chains (Friedt, 2021), but their impact is projected to grow as storms become more intense and flooding becomes more frequent (Woetzel et al, 2020). Sea-level rise is expected to have a moderate impact on supply chain operations by the end of the century because of the projected loss of port infrastructure and damage to coastal transport networks (Kafalenos et al, 2012).…”