Disaster-mitigating and general innovative responses to climate disasters: Evidence from modern and historical China

In studies on the effects of climate disasters, positive aspects are often overlooked. However it is important to accurately estimate the long-run impact of these disasters. This study presents the first attempt to investigate the innovative response to climate disasters in modern and historical China. For modern China, using panel data of up to 31 provinces from 2005 to 2013 and the Generalized Methods of Moments (GMM) technique, this study suggests that past climate disasters have led to an increase in the number of disaster-mitigating patents. These patents also boost innovations in other fields, which indicate that there exists a spillover effect in technological progress. The paper further investigates five major province groups in modern China and finds that disaster mitigating patents not only respond to local disasters but serve as feedback to disasters occurring in neighboring provinces as well. Additionally, this study creatively uses the time-series data from 11 A.D. to 1910 A.D. to analyze the historical case with the Ordinary Least Square (OLS) method. The results show that climate disasters only spurred innovations in disaster mitigation fields and not in others, meaning that innovation spillovers did not exist in historical China. This study provides practical implications for policymakers and governments. They should introduce incentives to encourage and increase investment in research and technological development sectors after climate disasters.