Thirsty business: A global analysis of extreme weather shocks on firms
Using global data from the World Bank's Enterprise Surveys that includes the precise geo-location of surveyed firms, this paper examines how dry spells and precipitation shocks influence firm performance. The varied effects of extreme weather events on the private sector are not well understood. Firms are a critical engine of economic growth. They generate jobs, provide essential products and services, and encourage innovation. They link cities and towns to global markets.
The study finds that firms in areas that experience dry spells have lower performance in terms of sales. This is particularly true for smaller firms and those in developing economies. A higher number of extreme dry days also increases the chances that a firm will exit the market.