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;
https://doi.org/10.59576/sr.1135
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Provider: Federal Reserve Bank of New York
Part of Series: Staff Reports
Publication Date: 2024-11-01
Number: 1135