Resilience to extreme weather events and local financial structure of prefecture-level cities in China

Vinzenz Peters*, Jingtian Wang, Mark Sanders

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review

Abstract

We study the local economic impacts of extreme weather events and the role of local finance in economic resilience. We use data on the physical intensities of extreme wind and precipitation events for 284 prefecture-level cities in China between 2004 and 2013. We estimate impulse response functions using a bias-corrected method of moments estimator to capture the dynamic responses of affected cities up to 5 years after such events. We find that extreme precipitation events depress the growth of local GDP per capita for multiple years, while the negative effects of storms vanish after the first year. We then use this model to measure the economic resilience of cities to extreme weather events. Regressions of economic resilience on indicators of the local financial structure suggest that cities with higher levels of debt are less resilient. Moreover, the presence of state-owned commercial banks appears to be instrumental to regional economic resilience. As extreme weather events are expected to become more frequent and severe due to climate change, our results inform the emerging debate about regional economic resilience to weather-related shocks.
Original languageEnglish
Article number125
Number of pages21
JournalClimatic Change
Volume176
Issue number9
DOIs
Publication statusPublished - 30 Aug 2023

Keywords

  • China
  • climate change
  • economic resilience
  • extreme weather events
  • Local economic impacts
  • local finance

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