Assessing the indirect impacts of hydro-geological hazards on Italian firms: a nation-wide assessment

Italy is a country seriously affected by landslides and floods: these hydro-geological hazards persistently cause fatalities and severe economic losses, but to date little is known on the indirect effects that such hazards exert on the local and national economy.

In this nation-wide study, the indirect effects of hydro-geological phenomena on Italian firms are assessed by coupling some indicators of the performance of Italian firms, and a dataset of flood and landslide events.

Econometric indicators were defined starting from data provided by organizations such as INPS, ISTAT, CERVED, Tax Registry and Bank of Italy. A geodatabase providing the timing and location of harmful hydro-geological events was compiled by an automated web datamining procedure based on a semantic algorithm scanning internet news. These datasets, with a spatial detail at the municipality level, cover the period from 2010 to 2020 and a statistical analysis was carried out to assess to which extent hydro-geological disasters affected the competitiveness of local economies.

The results showed that firms located in municipalities hit by a relevant event face on average a 4.8% increase in the probability of exiting the market with respect to non-impaired firms. Moreover, surviving firms seem to be slightly affected by natural disasters, in particular on the revenue side (-3.5%) and, to a lesser extent, on employment (-1.7%). We also explored the heterogeneity of these effects, discovering that indirect impacts seem more relevant for micro and small businesses, for those active in services and those located in rural and suburban areas.