The Impact of an Extreme Weather Event on Business Performance

Abstract

We measure the impact of an extreme weather event on consumer spending and busines performance using transaction-level data from a global payment service provider on sales activity on the days around hurricane Harvey, which hit Houston, Texas, in August 2017. We use a difference-in-differences regression approach to evaluate point-of-sale payments in-store and online in Houston, relative to a comparable unaffected city in Texas. We estimate the overall loss in sales to be equivalent to 3.72 days of average sales and find that online sales mitigate total losses by 1.02 days of average sales. These results are robust to sub-samples of large and small firms, and by industry.

Keywords: Business Performance, Small and Medium Sized Enterprises (SMEs), Digital Payments, Climate