Necessity as the mother of invention: Innovative responses to natural disasters

How do innovators respond to the shock of a natural disaster? Do natural disasters spur technical innovations that can reduce the risk of future hazards? This paper examines the impact of three types of natural disasters—floods, droughts and earthquakes—on the innovation of their respective mitigation technologies. Using patent and disaster data, our study is the first to empirically examine adaptation responses across multiple sectors at the country level. Considering the potential endogeneity of disaster damages, we use meteorological and geophysical data to create hazard intensity measures as instrumental variables. Overall, we show that natural disasters lead to more risk-mitigating innovations, while the degree of influence varies across different types of disasters and technologies.