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Puce Sébastien Desbureaux (Banque Mondiale)

du mardi 19 décembre 2017 au mardi 19 décembre 2017

Drought in the City: The Economic Impact of Water Scarcity in Latin American Metropolitan Areas [PDF]

Abstract: While the harmful impact of droughts in rural areas is a well-documented topic, how urban areas are impacted by water scarcity remains largely an open question. In this paper, we provide evidence that cities’ economies also significantly suffer from droughts. If the public debate focuses on the repercussions of excess rainfall on cities, our results even suggest that the impact of droughts is larger than the impact of wet events. We draw this conclusion by compiling monthly labor force surveys covering 13,000,000 workers from 78 of the largest metropolitan areas of Latin America over 10 years, and by analyzing the impact of exogenous rainfall variations on workers and on firms. We show that large sustained dry events decrease the probability of employment, wages, the number of hours worked and incomes. Informal workers suffer the most. We show that a worsening of health conditions and an increase in power outages are two pathways explaining our results.