Behavioural responses on natural disasters : empirical evidence from a natural experiment in Germany

In the course of the ongoing process of climate change, natural disasters like storms, floods and droughts become more likely and/or more severe. While there is a growing macroeconomic literature on the growth-effects of natural disasters, little is yet known about the microeconomic channels through which certain types of disasters might affect short and especially long-run growth. This paper contributes to filling this gap in the literature by studying behavioural responses to the August 2002 flood in central Europe. Based on the GSOEP dataset we study individual saving behaviour and migration decisions of directly affected and unaffected individuals. We find a significant decrease of individual savings and an increasing probability to move out of the affected area throughout the years after the flood occurred. Both effects might induce negative long-term growth consequences.