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

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@article{bf3ffb6c570b4a5e8035a7d24d829e0d,
title = "Estimating the direct and indirect impact of typhoons on plant performance: Evidence from Chinese manufacturers",
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.",
author = "Rob Elliott and Yi Liu and Eric Strobl and Meng Tong",
year = "2019",
month = nov,
doi = "10.1016/j.jeem.2019.102252",
language = "English",
journal = "Journal of Environmental Economics and Management",
issn = "0095-0696",
publisher = "Elsevier",

}

RIS

TY - JOUR

T1 - Estimating the direct and indirect impact of typhoons on plant performance

T2 - Evidence from Chinese manufacturers

AU - Elliott, Rob

AU - Liu, Yi

AU - Strobl, Eric

AU - Tong, Meng

PY - 2019/11

Y1 - 2019/11

N2 - 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.

AB - 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.

U2 - 10.1016/j.jeem.2019.102252

DO - 10.1016/j.jeem.2019.102252

M3 - Article

JO - Journal of Environmental Economics and Management

JF - Journal of Environmental Economics and Management

SN - 0095-0696

M1 - 102252

ER -