A0854
Title: Natural disasters and firm selection: Heterogeneous effects of extreme rainfall events on manufacturing sectors in Japan
Authors: Jun Yoshida - Tohoku Gakuin University (Japan) [presenting]
Shinsuke Uchida - Nagoya City University (Japan)
Katsuhito Nohara - Rikkyo University (Japan)
Akira Hibiki - Tohoku University (Japan)
Abstract: Many previous studies have investigated the economic impact of natural disasters such as floods, heavy rainfall, and typhoons. However, the findings are mixed. Some report positive effects on economic growth, while others find negative impacts. Moreover, the duration of the damage varies, with some disasters causing long-term disruption and others only short-term effects. The long-term effects of extreme rainfall are explored on shipment values and the number of facilities in the manufacturing sector using city-level data from Japan and a staggered difference-in-differences approach. The findings highlight the vulnerability of small-sized facilities, especially in areas with little prior flood experience. These facilities tend to lack both preparedness and the knowledge necessary to mitigate damage caused by extreme weather. In contrast, large-sized facilities often implement disaster countermeasures proactively, regardless of previous flood experience. They may also share mitigation strategies across their locations in different areas. These results suggest that public policy should focus on encouraging small-sized facilities to adopt disaster preparedness measures before a disaster occurs. In particular, it is crucial to provide facilities in infrequently flooded cities with cost-effective access to the lessons learned from those in frequently affected areas. Such policies can help build resilience against future climate-related risks.
