Greening to shield: The impacts of extreme rainfall on economic activity in Latin American cities

Abstract

Latin American cities are increasingly impacted by floods and this trend is likely to be further exacerbated under the combined effects of climate change and urbanisation. To reduce urban flood risk, green infrastructure and the ability to preserve and rehabilitate green spaces is often mentioned as an option to improve the hydraulic response of cities. Yet, little empirical evidence exists about the degree to which a greener city land cover can reduce the impacts of extreme rainfall on urban economic activity. Using earth observations from 630 cities across Latin America, this paper shows that extreme rainfall has a negative impact on urban economic activity, as proxied by cities’ night lights. Importantly, it finds that this negative impact diminishes as city’s land cover becomes greener: for cities where dense vegetation represents more than 20 % of total city area, the marginal impact of extreme rainfall is broadly halved vis-a-vis cities below this threshold. A counterfactual analysis for the year 2015 suggests that increasing the greenness of 25 % of the cities in our sample could have reduced losses by US$ 6,500 million -equivalent to a 19 % reduction of total estimated losses. These results evidence the benefits that a greener city land cover that makes room for green infrastructure can provide to adapt to more erratic rainfall patterns.