Cyclones and development in India

Some of the most devastating natural disasters on the Indian subcontinent are tropical cyclones, which frequently wipe out the livelihoods of thousands of people in the agricultural sector. Since climate change will enhance both the frequency and intensity of these natural phenomena, it is crucial to estimate their short- and long-run costs and to understand how farmers adapt to these large and mostly uninsured income shocks. Using a new digital dataset of cyclone tracks, I exploit the random variation of hits over time to identify the causal impact of destruction on the area planted, the quantity produced and local harvest prices. I find that these effects are large and persist for up to two years after the shock. Moreover, households smooth income by substituting intertemporally across growing seasons.