Adapting to flood risk: Evidence from global cities

Sahil Gandhi, Matthew Kahn, Rajat Kochhar, Somik Lal, Vaidehi Tandel 01 August 2022

Major floods in India and Australia in 2022 have once again drawn attention to the destructive power of disasters. Climate change may increase the frequency and intensity of these shocks. At the same time, the capacity to deal with disasters will vary greatly from place to place and over time. Living conditions for families in India are very different from families in Australia. In India, a large proportion of urban households live in slums on hill slopes or other unsafe areas. The impact of a similar disaster will be different for two countries. Given that most of the world’s people now live in cities, it is important to measure the vulnerability and adaptive capacity of such productive areas to disasters.

Cities in developing countries are more affected

Research on the impacts of extreme weather predicts that the developing world, particularly poor and vulnerable populations, will be disproportionately affected (Mendelsohn et al. 2000, Mendelsohn et al. 2006, Toll 2009).

In our new paper (Gandhi et al. 2022), we use flood data from 9,468 cities in 175 countries to examine the differential impact of flooding on cities in high- and low-income countries. We combine monthly night light (VIIRS) data for these cities from 2012 to 2018 with a global dataset of geocoded disasters. Figure 1 shows that after a flood event, nighttime light falls and then recovers. Floods disrupt life in cities through temporary power failures, disruption of essential services, property damage and temporary closure of offices and factories. These are reflected in light seen at night (Kocornik-Mina et al. 2016).

Figure 1 Night light before and after floods in Chennai, India: 2015-16

Disagree: Chennai was hit by major floods between November and December 2015.

We examine whether cities experiencing frequent floods (referred to as at-risk cities) had lower flood deaths during 1970–2010. We hypothesized that cities that were exposed to repeated floods adapted to the destruction caused by flood events and became more resilient.

We find evidence of such adaptation for vulnerable cities in high-income countries; These cities saw fewer deaths per disaster in 2010-2018. In contrast, cities in low-income countries that experienced frequent floods in the past saw more deaths per disaster. Therefore, cities in developed countries have been more successful in mitigating the human destruction caused by floods.

Figure 2 Death toll in cities in high-income and low-income countries

Comment: Black circles depict coefficient estimates, which show the relationship between the number of urban extreme precipitation events (1970–2010) per disaster (2010–2018) for low-income, high-income, and cities in all countries. Coefficients to the right of 0 on the x-axis indicate a positive relationship and coefficients to the left of 0 indicate a negative relationship. Dashed lines show 95% confidence intervals. Full results and details are available in Table 3 of Gandhi et al. (2022).

We also document that cities in developing countries experience more short-term economic losses due to flooding than cities in developed countries. We find that flooding reduces the average nighttime light in cities by about 3%. Finally, we find that recovery is faster in high-income countries than in low-income countries; Economic activity in cities in high-income countries reached pre-flood levels in one month, while cities in low-income countries took two months to fully recover.

Figure 3 Effects of nighttime light flooding in cities in high-income and low-income countries

Comment: Black circles depict coefficient estimates, showing the relationship between flooding and nighttime lighting for cities in low-income, high-income, and all countries. Coefficients to the right of 0 on the x-axis indicate a positive relationship and coefficients to the left of 0 indicate a negative relationship. Dashed lines show 95% confidence intervals. Full results and details are available in Table 5 of Gandhi et al (2022).

Adaptation to flood shocks

Adaptation investments can reflect choices by individuals, such as relocating to a safer location, or by governments, such as investing in land-use planning and protective infrastructure. An emerging literature explores the causes and consequences of such strategies. Evacuation from risk areas is a key strategy (Desmet et al. 2018), as found in tornado-affected areas (Boustan et al. 2012) and hurricanes (Strobl 2011) in the United States.

However, recent research suggests that post-disaster government relief (Henkett et al. 2022) or high costs associated with migration to low-income countries (Cattaneo and Peri 2016, Peri and Sasahara 2019) discourage people from moving to safer places. Using large flood datasets mostly in developing countries, Kocornik-Mina et al. (2016) find that economic activity does not shift to safer areas. Our study found no evidence of reduced population growth in cities in low-income countries that experienced repeated flooding in the past.

Wealthier places that have the resources and infrastructure to deal with disasters tend to be more resilient. Using city GDP, we find that within the same country, high-income and middle-income cities experience less short-term economic damage after floods than low-income cities. This city-level evidence for the period between 2012 and 2018 supports the claim that economic productivity plays a causal role in mitigating damage from Mother Nature’s increasingly powerful thrusts.

Other factors – such as investment in flood-protection measures such as levees and dams or the quality of a country’s political institutions – can play a role in reducing the impact of floods. For 3,820 cities in China, India, Mexico, and the United States, we use a geocoded dataset of large dams and identify which cities are 100 km downstream from a dam and thus protected by at least one dam. We find that cities protected by dams experience less disruption to economic activity, as measured by nighttime lighting during flooding, than cities without protection.

Conclusion

Flooding is an important type of disaster that poses fundamental measurement challenges in actually determining the geography of flood zones. We have invested time and effort in creating a standardized global city panel data set that includes major flood events for 9,468 cities in 175 countries.

Using an event-study framework, we document how the death toll from flooding and economic activity (as measured by light at night) is affected by such shocks. Our new empirical work supports the claim that economic development plays a central role in enhancing climate resilience. Housing quality and the housing costs of poor people offer a channel to explain the role of income in risk aversion to rich people (Brueckner 2013).

We also develop a direction for further research to understand the interplay between self-protection, market insurance, government action in the form of investment in local public goods, and individual strategies that ultimately determine population climate-change-related exposure. disaster

reference

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Cattaneo, C, and G Peri (2016), “Migration responses to increasing temperatures”, Journal of Development Economics 122: 127–46.

Desmet, K, DK Nagy and E Rossi-Hansberg (2018), “Adapt or Be Flooded”, VoxEU.org, 2 October.

Gandhi, S, M Kahn, R Kochhar, S Lal and V Tandel (2022), “Adapting to Flood Risk: Evidence from a Panel of Cities Worldwide”, NBER Working Paper 30137.

Kocornik-Mina, A, T McDermott, G Michaels and F Rauch (2016), “Do floods shift economic activity to safer areas?”, VoxEU.org, 21 January.

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