Quantifying the Economic Damage due to Hurricane Strikes: An Analysis from Outer Space for the Caribbean Region

Hurricanes are well known to cause considerable amount of damage in the Caribbean, a region that is highly susceptible to these phenomena and largely consists of small island developing economies. However, data constraints have limited the quantification of the damage to only very sparse and rough figures. In this paper we set out to quantify the economic damage due to hurricane strikes in the region using alternative data sources. Our innovation in this regard to use night lights data derived from satellite images the capture the extent of economic activity locally and then measures its changes after a hurricane strike. We proxy the potential damage due to a hurricane by using destruction index derived from actual hurricane track and a wind field model. Our results indicate that during our sample period 1992-2003 hurricanes significantly affected the extent to which economic activity as captured from outer space.