The regional economic impact of wildfires: Evidence from Southern Europe

We estimate the impact of wildfires on the growth rate of gross domestic product (GDP) and employment of regional economies in Southern Europe from 2011 to 2018. To this end we match Eurostat economic data with geospatial burned area perimeters based on satellite imagery for 233 Nomenclature of Terr...

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Bibliographic Details
Published in:Journal of environmental economics and management 2023-03, Vol.118, p.102787, Article 102787
Main Authors: Meier, Sarah, Elliott, Robert J.R., Strobl, Eric
Format: Article
Language:English
Subjects:
Employment growth
GDP growth
Natural disasters
Wildfire
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Summary:We estimate the impact of wildfires on the growth rate of gross domestic product (GDP) and employment of regional economies in Southern Europe from 2011 to 2018. To this end we match Eurostat economic data with geospatial burned area perimeters based on satellite imagery for 233 Nomenclature of Territorial Units for Statistics (NUTS) 3 level regions in Portugal, Spain, Italy, and Greece. Our panel fixed effects instrumental variable estimation results suggest an average contemporary decrease in a region’s annual GDP growth rate of 0.11–0.18% conditional on having experienced at least one wildfire. For an average wildfire season this leads to a yearly production loss of 13–21 billion euros for Southern Europe. The impact on the employment growth rate is heterogeneous across economic activity types in that there is a decrease in the average annual employment growth rate for activities related to retail and tourism (e.g., transport, accommodation, food service activities) of 0.09–0.15%, offset by employment growth in insurance, real estate, administrative, and support service related activities of 0.13–0.22%.
ISSN:0095-0696
1096-0449
DOI:10.1016/j.jeem.2023.102787