Not just hurricanes and droughts: less extreme but more frequent weather events, such as thunderstorms, can have significant and lasting economic impacts, with effects that vary across different socio-economic groups. This is one of the main findings of the study recently published in the Journal of Environmental Economics and Management (JEEM), conducted by researchers from the Institute of Economics and the Department of Excellence L’EMbeDS at the Scuola Superiore Sant’Anna, the Department of Statistics at the Pennsylvania State University, and the Department of Economics at Northwestern University. The study highlights how these phenomena, while less destructive than hurricanes, affect wages and incomes in ways that exacerbate existing economic inequalities. In particular, labor income is the most affected.
The study used detailed data on over 200,000 weather events that occurred in the United States between 1991 and 2019. “These are events that, although not considered true extreme phenomena, still cause significant damage, and their frequency leads to an accumulation of damage over time,” explains Matteo Coronese, author of the study and researcher at the Institute of Economics and the L’EMbeDS Department of Excellence of the Scuola Superiore Sant’Anna. By combining meteorological data with economic information at the county level, the researchers analyzed the trends in wages and incomes after exposure to these storms. “The results indicate that wages experience persistent losses over time, while incomes tend to recover gradually,” continues Coronese. “Since wages constitute the majority of income for the poorest segments of the population, these dynamics imply a worsening of already high income inequalities.”
“The estimated impacts, although significantly lower than those of extreme events like the one recently observed in Valencia, are still non negligible,” highlights Federico Crippa, author of the study and PhD candidate at the Department of Economics of Northwestern University. “Over a five-year period, a significant increase in exposure to thunderstorms leads to wage losses equivalent to about half of the contraction seen after the 2007 financial crisis.”
“The geographic and social distribution of these impacts is notable,” adds Francesco Lamperti, author of the study, professor at the Institute of Economics and the L’EMbeDS Department of Excellence of the Scuola Superiore Sant’Anna, and scientist at the Euro-Mediterranean Center on Climate Change. “The poorest counties suffer more severe losses, highlighting a lack of adaptation compared to wealthier areas. However, the study emphasizes that public intervention can play a crucial role: counties that receive federal aid immediately after one of the storms considered in our study do not experience significant losses in either wages or incomes.”
“Another important aspect concerns the impact on productive sectors,” explains Francesca Chiaromonte, author of the study, professor at the Institute of Economics of the Scuola Superiore Sant’Anna and at the Department of Statistics of the Pennsylvania State University, and scientific coordinator of the L’EMbeDS Department of Excellence. “We have observed that sectors with higher physical capital intensity, such as manufacturing, suffer the most significant losses, along with a reduction in employment. It will be essential to extend the analysis to other regions of the world to understand similar dynamics in different contexts.”
“Our study is part of a growing focus on the economic impacts of weather events,” comments Andrea Roventini, author of the study, director of the Institute of Economics at the Scuola Superiore Sant’Anna, and member of the L’EMbeDS Department of Excellence. “With climate change threatening to increase both the frequency and the intensity of these phenomena, it is crucial to strengthen adaptation and mitigation policies to reduce local vulnerabilities and promote greater economic resilience. This study,” concludes Roventini, “demonstrates how integrating large datasets from various sources can offer new perspectives on the socio-economic dynamics linked to weather events. Such approaches, central to the mission of the Institute of Economics and the L’EMbeDS Department of Excellence, provide crucial tools for understanding and addressing global challenges related to climate and inequality.”
