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Socioeconomic Risks of Extreme El Niño Event-Related Road Damages in Peru

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Abstract

This study evaluates the socioeconomic risk that extreme El Niño event-related road damages present to Peru by combining an environmental modelling of events’ occurrences in the country with a quantitative modelling of their effects on its economy. The dynamic of occurrence of events is modelled as a stochastic process with a vector autoregressive representation based on historical climatic data, and simulated over a 10-year period with a non-parametric bootstrap procedure. The indirect consequences of events’ related road damages are addressed with a multiregional dynamic computable general equilibrium model through an increase in interregional transportation costs and, more originally, a negative externality effect on activities’ output, which is estimated beforehand using a firm database. We find that extreme El Niño events constitute a significant one-off disaster risk for the country, threatening shifts of − 2.8% in GDP and + 1.9% in poverty rates with an annual probability p = 1.4%. We further show that they also present a longer-term risk, leading to average annual deviations from normal trend by − 0.8% in GDP and + 0.4% in poverty rate with a probability p = 12.6% over a 10-year period. However, we finally show that Peru might reduce these socioeconomic risks associated with these non-frequent but recurrent climatic shocks in constructing more disaster-resilient road infrastructure.

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Acknowledgements

The authors would like to thank Juan Salavarriga for its research assistance and the two anonymous reviewers for their comments and suggestions for improving this study.

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Authors and Affiliations

  1. Universite de Pau et Des Pays de L’Adour, E2S UPPA, CNRS, TREE, Collège EEI, 8 Allée des Platanes, 64100, Bayonne, France

    Jean-Marc Montaud

  2. Universidad del Pacífico, Lima, Perú

    Jorge Dávalos & Nicolas Pécastaing

  3. Partnership for Economic Policy (PEP) Network research fellow, Lima, Perú

    Jorge Dávalos

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  1. Jean-Marc Montaud
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Contributions

J.M Montaud: CGE modelling and writing of the paper. J. Davalos: econometric modelling. N. Pecastaing: data collection and writing of the paper.

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Correspondence to Jean-Marc Montaud.

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Montaud, JM., Dávalos, J. & Pécastaing, N. Socioeconomic Risks of Extreme El Niño Event-Related Road Damages in Peru. Environ Model Assess 27, 831–851 (2022). https://doi.org/10.1007/s10666-022-09830-9

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