The Impact of Tropical Storms on Households: Evidence from Panel Data on Consumption

Abstract

This paper investigates the impact of tropical storms on Jamaican household consumption. We build a panel data set that follows individual households over time thus enabling us to take account of time invariant household and location unobservables that could be correlated with mean tropical storm exposure. Our results show that while the average damaging hurricane reduces per capita consumption by approximately 1.1%, more destructive events can cause losses multiple times this amount. There are, however, heterogeneous impacts across households, where only those that live in buildings with less wind resistant walls are affected. Additionally, we find that households are able to partially buffer the negative impact on consumption through remittances and savings, as well as by shifting funds away from non-regular expenditures. Again, households differ in the nature of this buffering according to the wind resistance of their buildings.

Left home high and dry-reduced migration in response to repeated droughts in Thailand and Vietnam

“…For instance, Gröger and Zylberberg (2016) find that average household income fell by 10% in their sample of Vietnamese households after Typhoon Ketsana. Similarly, a recent study by Henry et al (2019) shows that an average hurricane reduces per capita consumption by approximately 1.1% in a household sample from Jamaica. Nguyen et al (2015) document how environmentally induced economic losses drive households towards alternate livelihood sources, including migration.…”

From Poverty to Disaster and Back: a Review of the Literature

“…In terms of economic damage, the average for kacha houses, $400, was also well above the $133 for pucca ones (Akter and Mallick 2013). In Jamaica, Henry et al (2019) investigate the impact of tropical storms on household consumption and find that only households that live in buildings with less wind resistant walls are affected.…”

“…9). For example, Henry et al (2019) find that in Jamaica, the households that are able to partially buffer the effects of tropical storms on consumption (through savings and remittances) are the ones who live in buildings with more wind-resistant walls.…”

Extreme Climate and Absence from Work: Evidence from Jamaica

“…Third, compared to a private sector worker, there is no impact on the odds of an individual working in the public sector being temporarily absent from work due to excess rainfall; an outcome that can be explained by employers having mechanisms in place to reduce absence such as through transportation and work-from-home infrastructure. We next investigate whether extreme climate conditions have any persistent impact as many in the weather literature have done (Spencer and Polachek 2015;Spencer and Urquhart 2018;Henry et al 2020). These results are shown in Table 6.…”

“…For example, Zander and Matthew (2019) find that heat stress compromises economic activity due to a significant reduction in workers' productivity. 1 The impact of climate extremes on work absence is therefore an important issue to investigate for Jamaica since there will be implications for economic growth and household welfare (Karim and Noy 2014;Henry et al 2020).…”