Three Essays on the Impacts of Weather Disasters: Evidence From New Zealand and Colombia

<p><strong>This thesis explores the multifaceted impacts of climate disasters on economic and psychological well-being across different contexts, using advanced econometric techniques and rich datasets. The first chapter examines the impact of rising temperatures on rural household expenditure in Colombia by combining high-resolution weather data with longitudinal household surveys. We find that a one-standard-deviation increase in average daily temperature during rainy months significantly reduces household expenditure, primarily through crop losses. While households respond by seeking non-agricultural jobs and liquidating livestock, these strategies fail to fully offset income losses due to limited access to risk-coping mechanisms. Wealth and rainfall mitigate some adverse effects. Our findings are robust to various specifications and alternative datasets.</strong></p><p>The second chapter investigates the economic impacts of two cyclone-induced floods on firms in New Zealand, using high-resolution satellite imagery and detailed business records. Employing a Difference-in-Differences (DID) approach, we find that flood-affected firms experienced significant declines in output, sales, profit, and value-added. Contrary to common assumptions, capital damage and labour displacement—rather than productivity losses—were the primary drivers of these effects. Firms responded by liquidating inventories and assets but showed no evidence of relocation. Results are robust across multiple econometric methods, including SDID.</p><p>Finally, the third chapter uses a Synthetic Difference-in-Differences (SDID) approach to examine the mental health and earnings impacts of Cyclone Gabrielle on workers in New Zealand. Leveraging administrative data on prescribed medications and tax records, we find that workers in heavily damaged areas were more likely to be prescribed medication for psychological disorders than those in unaffected areas. Contrary to expectations, income losses played a limited role in mediating mental health impacts. Instead, physical and emotional trauma emerged as key drivers, underscoring the importance of non-economic factors in post-disaster recovery.</p>