Deciphering the impact of hydro-geological hazards on Italian firms: a nation-wide assessment

Landslides and floods are responsible for causalties and economic losses worlwide and Italy is one of the most affected countries. However, despite the relevant damages, 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 od hydro-geological phenomena on Italian firms are assessed by coupling variables concerning Italian firms' competitiviness with a dataset of flood and landslide events. Econometic indicators were defined starting from data provided by organizations such as INPS, ISTAT, CERVED, Tax Registry and Bank of Italy. A geodatabase providig 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. The datasets covers all italian municiaplites in the timespan ranging from 2010 to 2020.

A statistical analysis highlighted that hydro-geological disasters, even the non-extreme ones, may negatively affect the future development of local economies: 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%). Acros Italy, these effects are very eterogeneus, depending on the location and the characteristics of th affected firms. The most evident effects are observed in case of micro and small businesses, for those active in services and those located in rural and suburban areas.