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Estimating the direct and indirect impact of typhoons on plant performance: Evidence from Chinese manufacturers

Elliott, RJR; Liu, Y; Strobl, E; Tong, M; (2019) Estimating the direct and indirect impact of typhoons on plant performance: Evidence from Chinese manufacturers. Journal of Environmental Economics and Management , 98 , Article 102252. 10.1016/j.jeem.2019.102252. Green open access

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Abstract

We quantify the impact of typhoons on manufacturing plants in China. To this end we construct a panel data set of precisely geo-located plants and a plant-level measure of typhoon damage derived from storm track data and a wind field model. Our econometric results reveal that the impact on plant sales can be considerable, although the effects are relatively short-lived. Annual total costs to Chinese plants from typhoons are estimated to be in the range of US$ 3.2 billion (2017 prices), or about 1 per cent of average turnover. When we examine the channels by which plants react to a storm event we find that there is some buffering through an increase in debt and a reduction in liquidity. In terms of propagating the shock through foreign or domestic channels, our estimates suggest that plants prefer to reduce sales to domestic buyers more than foreign buyers and purchases from foreign rather than domestic suppliers. We also find some evidence of a negative indirect effect on turnover through spillovers from customers and a positive effect through damage to very nearby competitors.

Type: Article
Title: Estimating the direct and indirect impact of typhoons on plant performance: Evidence from Chinese manufacturers
Open access status: An open access version is available from UCL Discovery
DOI: 10.1016/j.jeem.2019.102252
Publisher version: https://doi.org/10.1016/j.jeem.2019.102252
Language: English
Additional information: This version is the author accepted manuscript. For information on re-use, please refer to the publisher’s terms and conditions.
Keywords: China, Typhoons, Wind field model, Plants, Economic impact. JEL codes: O17, O44 and Q54.
UCL classification: UCL
UCL > Provost and Vice Provost Offices
UCL > Provost and Vice Provost Offices > UCL SLASH
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS > Dept of Economics
URI: https://discovery.ucl.ac.uk/id/eprint/10085443
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