Borradores de Economía - Weather shocks, productivity and performance of manufacturing firms in Colombia
The series Working Papers on Economics is published by the Office for Economic Studies at the Banco de la República (Central Bank of Colombia). The works published are provisional, and their authors are fully responsible for the opinions expressed in them, as well as for possible mistakes. The opinions expressed herein are those of the authors and do not necessarily reflect the views of Banco de la República or its Board of Directors.
The series Working Papers on Economics contributes to the dissemination and promotion of the work by researchers from the institution. On multiple occasions, these works have been the result of collaborative work with individuals from other national or international institutions. This series is indexed at Research Papers in Economics (RePEc). The opinions contained in this document are the sole responsibility of the author and do not commit Banco de la República or its Board of Directors.
Abstract
In this paper, we study the effect of weather shocks on firms' productivity and performance. Over the last decades, the world has faced a notable increase in extreme weather events, which are becoming more frequent and devastating. These weather shocks affect firms' productivity, ultimately affecting their performance in the market. We propose an estimation strategy that allows us to quantify these effects. We use data of EAM from DANE and climate information from CHIRPS and Copernicus. Our results show evidence that weather shocks negatively affect firms' productivity, which translates into lower firm performance on different variables, such as ROA, gross investment, and added value.
Climate shocks negatively affect productivity. This is due to the health problems they cause and the damage to road infrastructure, aspects that ultimately affect the economy in general and firms in particular.
