Droughts’ Trade Effects and Physical Infrastructure

31 Pages Posted: 24 May 2018

See all articles by Svetlana Ledyaeva

Svetlana Ledyaeva

Aalto University - Department of Economics

Date Written: May 11, 2018

Abstract

In this paper, we study trade effects of droughts transmitted via damaged infrastructure. In particular, we suggest that droughts affect export via negative effects on infrastructure – land and water transport, electricity and water supply. Our estimations, based on data for export in 194 countries in 1997-2015, show that negative effects of droughts for export are indeed transmitted via damaged infrastructure. The strongest short-term effects are caused by most severe droughts (with fatalities) for export of industries with high reliance on electricity supply, land and water transport. The strongest long-term effects come from severe droughts with fatalities to export of industries with high dependence on electricity supply. Length of the drought is negatively associated only with export of industries with high reliance on water supply.

Keywords: trade, export, natural disasters, droughts, infrastructure, transport, water supply, electricity supply

JEL Classification: F14, F18, Q51, Q54

Suggested Citation

Ledyaeva, Svetlana, Droughts’ Trade Effects and Physical Infrastructure (May 11, 2018). Available at SSRN: https://ssrn.com/abstract=3176948 or http://dx.doi.org/10.2139/ssrn.3176948

Svetlana Ledyaeva (Contact Author)

Aalto University - Department of Economics ( email )

PO Box 1210
FI-00101 Helsinki
Finland

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