The Impacts of Flooding and Business Activity and Employment: A Spatial Perspective on Small Business

Abstract

Severe flooding events often cause significant damage to an area, including affecting the local economy, disrupting transportation, and damaging infrastructure. While raw statistics offer some understanding of crop and property-related damages, resulting from large-scale floods, we also need to consider the longer-term impacts and recovery within an area and the interaction between adjacent areas during the recovery process. In this paper, we examine the impacts of major and minor flood events on business employment and the number of establishments in different sectors of the economy. While we find that flood events had a negative short-run impact on agricultural services and particularly small establishments, estimations show positive impacts in the service sector. We also identify significant spatial spillovers.