International Review of Environmental and Resource Economics > Vol 12 > Issue 4

The Long-Term Consequences of Disasters: What Do We Know, and What We Still Don't

Ilan Noy, Victoria University of Wellington, New Zealand, William duPont IV, Independent Researcher,
Suggested Citation
Ilan Noy and William duPont IV (2018), "The Long-Term Consequences of Disasters: What Do We Know, and What We Still Don't", International Review of Environmental and Resource Economics: Vol. 12: No. 4, pp 325-354.

Published: 06 Dec 2018
© 2018 I. Noy and W. duPont IV
Environmental Economics,  Environmental Economics:Climate Change,  Climate Change
JEL Codes: Q01Q54Q56
Economic impactlong-runlong-term growthrecoverysocio-economicdisaster

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In this article:
1. Introduction
2. The Typology of Disasters: Direct and Indirect Damages from Disaster Events
3. Identifying the Long-Run Impact of Disasters
4. Long-Term Macroeconomic Impact: National Income Accounts
5. Disaster Impacts at the Local and Regional Level
6. Conclusion


What are the long-term economic consequences of disasters? This question is debated among scholars, but any answer for it is very important for policymakers as well. Several factors should be taken into consideration when assessing likely post-disaster long-term outcomes, including the type and severity of the event, the underlying composition of the economy, and the total area impacted. Additionally, the way that researchers choose to define long-term impact, and what is being measured, also matters. Regardless, there is no clear consensus concerning the long-term economic consequences of these events. A common way to identify this impact is to compare the economy post-disaster to the level it was at prior to the event. This approach can be useful when estimating the impact in the short term; however, when analyzing the long-term impact this approach is less convincing. Economies are constantly changing, and over long periods of time these changes will accumulate. Therefore, one of the biggest challenges these inquiries face is the need to estimate what the level of economic activity would have been had the disaster not occurred. The methodologies in which researchers go about doing this can have a significant impact on their conclusions, as we show with several examples. We also describe studies that use data collected at regional or city/township level; these have found a much more nuanced set of results.