Although natural disasters are commonplace, they leave in their wake an enormous amount of damage. Another strand of my research uses a variety of econometric tools to better understand the less visible impacts that natural disasters have on the local areas. These include academic papers that study the effect of disasters on human capital, as well as work for FEMA and Puerto Rico that study the effect of disasters on local labor markets.
Effects on Human Capital:
The effect of natural disasters on human capital in the United States (with R. Jisung Park and Lucas Husted), Nature Human Behavior, June 2023
Interview on the Paper: Resources Radio
Other Select Media: Barrons; Scientific American; NewsNation
Abstract: Although natural disasters are commonplace, they leave in their wake an enormous amount of damage. The physical damage they cause is immediately apparent, but less obvious is the potential magnitude of disruptions to learning and resulting damage to human capital. Using the universe of Presidential Disaster Declarations in the United States, we show that natural disasters impact a region's human capital both via reductions in learning for students who remain in school as well as a reduction in the years of schooling completed. These effects appear to be scarring and persistent. Quantifying these losses using the implied reduction of lifetime earnings suggests that natural disasters reduce a region’s human capital by a similar magnitude as the assessed property damage.
Shameless Plug: If this topic interests you, buy Jisung's book Slow Burn: The Hidden Costs of a Warming World
Loss of Schooling from Tropical Cyclones: Evidence from 13 Low- and Middle-Income Countries (with Renzhi Jing, Sam Heft-Neal, Zetianyu Wang, Jie Chen, Minghao Qiu, Zachary Wagner, and Eran Bendavid) [R&R at PNAS]
Abstract: Increasing educational attainment is one of the most important and effective tools for health and economic improvements. The extent to which extreme climate events disrupt education, resulting in fewer years of schooling and reduced educational attainment, remains under-studied. Children in low- and middle-income countries may be uniquely vulnerable to loss of schooling after such disasters due to the poor physical condition of schools and the lack of resources to rebuild and mitigate unexpected household shocks. Our analysis assesses this overlooked social cost of tropical cyclones on schooling attainment. We study the education records of nearly 5.1 million people living in 13 low- and middle-income countries that were exposed to tropical cyclones between 1954-2010. We find that exposure to tropical cyclones during preschool age is associated with a 2.7 percentage point decrease in primary school enrollment on average (14.2% decrease), with larger effects from more intense storms (up to 28% decrease for the most intense storms). These effects are more pronounced among school-age girls compared to boys and are greater in areas less accustomed to experiencing tropical cyclones. We estimate that, across all LMICs, tropical cyclone exposure has resulted in more than 410,000 children not attending primary school in the last 20 years, leading to a reduction of more than 4.1 million total years of schooling. These impacts, identified among some of the world’s poorest populations, may grow in importance as exposure to severe tropical cyclones is projected to increase with climate change.
Effects on Local Labor Markets:
Guidance on When to Estimate a Future Price Factor: Development of Criteria and Thresholds (with Priscillia Hunt, Lucas Husted, Jessie Coe, Kathryn A. Edwards, Aaron Strong, and Jeffrey B. Wenger), RAND Report RR-A222-11, 2022
Summary: The Federal Emergency Mangaement Agency (FEMA) increasingly seeks fixed-price contracts for Public Assistance expenditures to help communities rebuild after disaster. FEMA and those communities have large incentives to estimate costs correctly before contracts are signed. One challenge to providing an accurate estimate of construction costs is that the cost of rebuilding can be affected by the reconstruction effort itself. One way to account for such changes is to use a future price forecast (FPF) factor, which adjusts a project's cost estimate to account for overall price-level increases caused by a disaster. The purpose of this study was to help FEMA identify when to use an FPF. To carry out the study, the authors convened panels of experts to discuss scenarios of hypothetical disasters—in particular, how these disasters could affect local economies. They also tested a variety of community and disaster-related measures that might be predictive of large cost increases and explored the relationship between different types of skills and labor-mobility variables and disaster effects on construction costs. They then estimated how often disasters cause large increases in construction costs and identified criteria to use in determining when an FPF might be warranted. They also explored the implications of these criterion thresholds by estimating FPFs in some what-if scenarios.
Forecasting Public Recovery Expenditures' Effect on Construction Princes and the Demand for Construction Labor (with Aaron Strong, Jeffrey B. Wenger, Drew M. Anderson, Kathryn A. Edwards, Kyle Siler-Evans, Jessie Coe, and R. J. Briggs), RAND Report RR-A1116-4, 2022
Summary: Alternative procedures for obtaining Public Assistance from the Federal Emergency Management Agency allow an applicant to bundle projects together and to not build back to the same state as predisaster. Cost overruns are the applicant's responsibility, and cost savings can be invested in other mitigation and risk reduction activities. In most cases, current construction costs are a good proxy for future costs, accounting for inflation. In the case of Puerto Rico's recovery from Hurricane María, the scale of the recovery efforts relative to the size of the economy means that these efforts are likely to fundamentally change the economy in terms of labor, materials, and equipment. As a result, in this project, the authors aimed to develop estimates of future construction costs and build multiplicative factors that cost estimators can apply to current costs to reflect the future cost of construction. To do this, they developed a disaster recovery expenditure simulator based on historical obligations; created a model to estimate expenditure scenarios' effect on prices of labor, materials, and equipment; devised an econometric approach to estimate substitutability of labor; and developed a labor demand estimator. This report documents their approach, data, findings, and recommendations.