Economic effects of natural disasters and armed civil conflict

Transcription

1 Working paper prepared for the conference on Climate Change and Security Drago Bergholt Department of Economics Norwegian University of Science and Technology (NTNU) Trondheim, Norway Päivi Lujala Department of Economics Norwegian University of Science and Technology (NTNU) Trondheim, Norway Centre for the Study of Civil War Peace Research Institute Oslo (PRIO) Oslo, Norway Centre for the Study of Civil War Peace Research Institute Oslo (PRIO) Oslo, Norway Trondheim, Norway June 2010

2 Motivation: - Widespread view that natural disasters can cause significant damage to a country. Nevertheless, the research out there is ambiguous in its findings. - Also: Greed versus grievance put aside, most conflict researchers and policymakers believe that low income is related to increased risk of civil conflict. Nevertheless, scholars struggle to quantify the causal effect in a credible way. - Our work: We study the link between geological and hydro-meteorological disasters, aggregated income growth fluctuations and the risk of armed civil conflicts. - With respect to conflicts: We aim for causal assertions by using (arguably) exogenous natural disasters as an instrument for income growth.

3 Motivation (continued): - Expected disaster-income-conflict relation: Natural disasters Economic growth Civil conflict A naive OLS-estimation of dy/dx adds in the response effect from civil conflicts on the economy, and we end up with biased estimates of the (ceteris paribus) income growth effect.

4 Motivation (continued): - Previous seminal work: Collier, etc: Greed, income opportunities/alternative costs, feasibility and rational expectations. Miguel et al. (2004): Causality versus correlation. - The hypotheses in our study: H1: Natural disasters have a negative effect on income growth. H2: Income growth shocks triggered by natural disasters increase the likelihood of civil conflict onset.

5 Econometric specifications: - Proxy on disaster magnitude: - Basic first stage model: - Basic second stage model:

6 Data:

7 Preliminary results (first stage):

8 Preliminary results (first stage):

9 Preliminary results (reduced form equations):

10 Preliminary results (second stage):

11 Conclusions: - Interpretation of the preliminary results: 1. When people are affected by geological and hydro-meteorological disasters like earthquakes, volcanoes, storms, floods and surges (and their consecutive sub-disasters) they statistically reduce GDP per capita growth within the year of the event. 2. Negative income shocks caused by such disasters do not seem to increase the risk of new armed civil conflicts. - Our findings are in line with recent papers that take on the IV/2SLS approach (Ciccone 2010 and Bernauer et al. 2010), but in contrast to seminal papers on income growth (Collier and Hoeffler 2004, 2007 & Miguel et al. 2004).

12 Concerns: - EM-DAT and their coding of missing data. - Possible direct effects of our disasters on conflict risk (the 2004 tsunami and the following developments in Aceh and Sri Lanka). - Econometric specifications, dynamics, etc.

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