Report

Clustering in Natural Disaster Losses

Abstract: In contrast with findings in climate science, economists often treat losses from natural disasters as statistically independent of one another. To better incorporate scientific insights into economic research, we introduce a methodology to identify spatial and temporal clusters in datasets on losses from natural disasters. We find that expected damage increases non-linearly with relative cluster size. Additionally, county-level damage is correlated with the damage experienced by other counties in the same cluster. Our findings suggest that accounting for clustering allows for a more complete understanding of the economic consequences of natural disasters.

Keywords: natural disasters; clustering; climate;

JEL Classification: Q50; Q54;

https://doi.org/10.59576/sr.1135

Bibliographic Information

Provider: Federal Reserve Bank of New York

Part of Series: Staff Reports

Publication Date: 2024-11-01

Number: 1135