Quantifying the Local Economic Growth Impact of Hurricane Strikes: An Analysis from Outer Space for the Caribbean

Studies of the impact of hurricanes on economic activity typically are restricted to a very aggregate level of analysis because of the lack of spatially disaggregated data. In this paper nightlight satellite imagery is employed as a measure of local economic activity in conjunction with a local proxy for potential hurricane destruction generated from a wind field model to statistically assess the impact of hurricane strikes on local economic growth. The regression results suggest that on average hurricane strikes reduce income growth by around 1.5% at the local level, with no effect beyond the year of the strike. This estimated impact from localized data is more than 2 times that implied by aggregate analyses.