The Impact of Hurricane Strikes on Short-Term Local Economic Activity: Evidence from Nightlight Images in the Dominican Republic

Abstract

The Dominican Republic is highly exposed to adverse natural events that put the country at risk of losing hard-won economic, social, and environmental gains due to the impacts of disasters. This study used monthly nightlight composites in conjunction with a wind field model to econometrically estimate the impact of tropical cyclones on local economic activity in the Dominican Republic since 1992. It was found that the negative impact of storms lasts up to 15 months after a strike, with the largest effect observed after 9 months. Translating the reduction in nightlight intensity into monetary losses by relating it to quarterly gross domestic product (GDP) suggests that on average the storms reduced GDP by about USD 1.1 billion (4.5% of GDP 2000 and 1.5% of GDP 2016).