Quantifying the costs of drought : new evidence from life satisfaction data

Carroll, Nick, Frijters, Paul, & Shields, Michael A. (2009) Quantifying the costs of drought : new evidence from life satisfaction data. Journal of Population Economics, 22(2), p. 445.

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We estimate the cost of droughts by matching rainfall data with individual life satisfaction. Our context is Australia over the period 2001 to 2004, which included a particularly severe drought. Using fixed-effect models, we find that a drought in spring has a detrimental effect on life satisfaction equivalent to an annual reduction in income of A$18,000. This effect, however, is only found for individuals living in rural areas. Using our estimates, we calculate that the predicted doubling of the frequency of spring droughts will lead to the equivalent loss in life satisfaction of just over 1% of GDP annually.

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59 citations in Web of Science®
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ID Code: 31893
Item Type: Journal Article
Refereed: Yes
Keywords: Drought, life satisfaction, income equivalence
DOI: 10.1007/s00148-007-0174-3
ISSN: 0933-1433
Subjects: Australian and New Zealand Standard Research Classification > COMMERCE MANAGEMENT TOURISM AND SERVICES (150000) > BUSINESS AND MANAGEMENT (150300)
Australian and New Zealand Standard Research Classification > ECONOMICS (140000) > APPLIED ECONOMICS (140200)
Divisions: Current > QUT Faculties and Divisions > QUT Business School
Deposited On: 21 Apr 2010 01:25
Last Modified: 29 Feb 2012 13:56

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