This talk will examine the global effects of droughts on economic activity, proxied by remote-sensed nighttime lights data. Olmstead uses two different, comprehensive indices of drought severity, one remote-sensed and one constructed from ground-sensed meteorological data, contributing to a literature on climate extremes that has previously focused on precipitation, rather than drought. Results suggest that moderate-or-worse droughts in the current year reduce luminosity by about 1 percent, with smaller but statistically significant impacts under even mild and incipient drought conditions. She estimates some lagged effects as well; moderate-or-worse droughts may reduce lights up to four years after they occur. She also tests for mediating effects of access to groundwater resources of varying quality and access to reservoirs impounded by dams. She finds evidence consistent with both groundwater and dams mitigating droughts’ economic impacts.
Bio:
Sheila Olmstead is a Professor at the Brooks School of Public Policy and Senior Faculty Fellow at the Atkinson Center for Sustainability, Cornell University. She is also a University Fellow at Resources for the Future and a Senior Fellow at the Property and Environment Research Center. Olmstead is a member of the EPA’s Science Advisory Board and President-Elect of the Association of Environmental and Resource Economists. She formerly served as Senior Economist for Energy and Environment at the President’s Council of Economic Advisers.