International Review of Environmental and Resource Economics > Vol 5 > Issue 1

Natural Disasters and the Economy — A Survey

Eduardo Cavallo, Inter-American Development Bank, USA, , Ilan Noy, University of Hawaii, Manoa, Department of Economics,
Suggested Citation
Eduardo Cavallo and Ilan Noy (2011), "Natural Disasters and the Economy — A Survey", International Review of Environmental and Resource Economics: Vol. 5: No. 1, pp 63-102.

Publication Date: 23 May 2011
© 2011 E. Cavallo and I. Noy
Environmental Economics
Natural disastersClimate changeGrowthEconomic impact


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In this article:
1 Introduction: Why Do We Need this Survey? 
2 Data on Disasters 
3 Determinants of Initial Disaster Costs 
4 Cross-country Studies of Indirect Impacts 
5 Case Studies of Disaster Impacts 
6 Policies and Disasters 
7 Climate Change and Natural Disasters 
8 Conclusions and Remaining Questions 


This paper surveys the state of the economic literature examining the aggregate impacts of natural disasters. The paper reviews the main disaster data sources available, discusses the determinants of the direct effects of disasters, and distinguishes between short- and long-run indirect effects. The paper then examines some of the relevant policy questions and follows up with a survey of current projections about the likelihood of future disasters. The paper ends by identifying several significant gaps in the literature.