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  • Evidence for sharp increase in the economic damages of extreme natural disasters
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Evidence for sharp increase in the economic damages of extreme natural disasters

Source(s):  Proceedings of the National Academy of Sciences of the United States of America (PNAS)

Climate change has increased the frequency and intensity of natural disasters. Does this translate into increased economic damages? To date, empirical assessments of damage trends have been inconclusive. This study demonstrates a temporal increase in extreme damages, after controlling for a number of factors. The paper analyzes event-level data using quantile regressions to capture patterns in the damage distribution (not just its mean) and find strong evidence of progressive rightward skewing and tail-fattening over time. While the effect of time on averages is hard to detect, effects on extreme damages are large, statistically significant, and growing with increasing percentiles. The results are consistent with an upwardly curved, convex damage function, which is commonly assumed in climate-economics models. They are also robust to different specifications of control variables and time range considered and indicate that the risk of extreme damages has increased more in temperate areas than in tropical ones. This research uses simulations to show that underreporting bias in the data does not weaken our inferences; in fact, it may make them overly conservative.



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  • Evidence for sharp increase in the economic damages of extreme natural disasters
  • Publication date 2019
  • Author(s) Coronese, Matteo; Lamperti, Francesco; Keller, Klaus et al.
  • Number of pages 6 p.

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