The Economic Impacts of Natural Disasters: A Review of Models and Empirical Studies

W. J. Wouter Botzen*, Olivier Deschenes, Mark Sanders

*Corresponding author for this work

Research output: Contribution to journalReview articleAcademicpeer-review

Abstract

Economic losses from natural disasters have been increasing in recent decades. This has been attributed mainly to population and economic growth in disaster-prone areas. Future natural disaster losses are expected to increase due to a continued increase in economic exposure and climate change. This highlights the importance of designing policies that can mitigate the impacts of these disasters on the economy and society. A rapidly expanding literature has estimated the direct (e.g., property damage) and indirect (e.g., gross domestic product growth, trade) economic impacts of natural disasters. This article reviews this emerging literature. We synthesize the main theoretical, computational, and empirical methods used, summarize key findings on the economic impacts of natural disasters, and discuss factors that have been found to mitigate disaster impacts. We conclude by identifying lessons for policymakers and outlining an agenda for future research in this field.
Original languageEnglish
Pages (from-to)167-188
Number of pages22
JournalReview of Environmental Economics and Policy
Volume13
Issue number2
DOIs
Publication statusPublished - 1 Jun 2019
Externally publishedYes

Keywords

  • CLIMATE-CHANGE
  • RISK
  • COST
  • CONSEQUENCES
  • GROWTH
  • DAMAGE
  • ADAPTATION
  • RESILIENCE
  • CHALLENGES
  • FRAMEWORK

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