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EQC and extreme weather events (part 2): Measuring the impact of insurance on New Zealand landslip, storm and flood recovery using nightlights

Author

Listed:
  • Sally Owen

    (Victoria University of Wellington)

  • Ilan Noy

    (Victoria University of Wellington)

  • Jacob Pástor-Paz

    (Motu Economic and Public Policy Research)

  • David Fleming

    (Motu Economic and Public Policy Research)

Abstract

Climate change is predicted to make extreme weather events worse and more frequent in many places around the world. In New Zealand, the Earthquake Commission (EQC) was created to provide insurance for earthquakes. In some circumstances, however, homeowners affected by extreme weather events can also make claims to the EQC – for landslip, storm or flood events. In this paper, we explore the impact of this public natural hazard insurance on community recovery from weather-related events. We do this by using a proxy for short-term economic recovery: satellite imagery of average monthly night-time radiance. Linking these night-time light data to precipitation data records, we compare houses which experienced damage from extreme rainfall episodes to those that suffered no damage even though they experienced extreme rainfall. Using data from three recent intense storms, we find that households which experienced damage, and were paid in a timely manner by EQC, did not fare any worse than households that suffered no damage from these extreme events. This finding suggests that EQC insurance is serving its stated purpose by protecting households from the adverse impact of extreme weather events.

Suggested Citation

  • Sally Owen & Ilan Noy & Jacob Pástor-Paz & David Fleming, 2019. "EQC and extreme weather events (part 2): Measuring the impact of insurance on New Zealand landslip, storm and flood recovery using nightlights," Working Papers 19_19, Motu Economic and Public Policy Research.
    • Handle: RePEc:mtu:wpaper:19_19
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    File URL: https://motu-www.motu.org.nz/wpapers/19_19.pdf
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    References listed on IDEAS

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    Cited by:

    1. Cuong Nguyen & Ilan Noy & Dag Einar Sommervoll & Fang Yao, 2020. "Redrawing of a Housing Market: Insurance Payouts and Housing Market Recovery in the Wake of the Christchurch Earthquake of 2011," CESifo Working Paper Series 8560, CESifo.

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    More about this item

    Keywords

    climate change; extreme weather; public insurance; recovery; New Zealand;
    All these keywords.

    JEL classification:

    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment
    • Q10 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - General
    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade
    • Q02 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Commodity Market

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