Dhruv Akshay Pandit

Dhruv Akshay Pandit

PhD Candidate in Information Management, researching the impacts of weather variability and shocks on the Portuguese socioeconomy.

The regional economic impact of weather shocks: Evidence from Portugal

Authors: Dhruv Akshay Pandit, Paulo M. M. Rodrigues, João Seixo

Published in Journal of Environmental Economics and Management, 140, 103409.

Abstract

Weather extremes shape short-run economic activity through both market and nonmarket channels, yet evidence on local consumer-side activity remains limited. Using a municipality-level panel of Portuguese data (2010-2021), we estimate panel VAR and local-projection responses to weather shocks of point-of-sale purchases (a measure of merchant-location transaction activity, not resident household consumption), together with unemployment and house prices. Our central methodological finding is that hourly rather than daily measurement of rainfall variability raises the estimated semi-elasticities by an order of magnitude, suggesting that the existing climate-economy literature systematically understates the importance of high-intensity rainfall. Substantively, the local-projection responses indicate that hourly rainfall volatility raises purchases on impact and reverses the following quarter, consistent with intertemporal reallocation; temperature variability generates a sharp positive impact effect followed by a contraction; and high fire-danger days raise contemporaneous purchases. Unemployment and house prices follow the same patterns more weakly. Regional heterogeneity is substantial, the Lisbon Metropolitan Area and the Algarve sometimes display effects opposite in sign to those in the North.

JEL Codes

  • Q54
  • R11
  • R12
  • C33

Suggested Citation

Pandit, Dhruv Akshay, Paulo M. M. Rodrigues, and João Seixo. "The Regional Economic Impact of Weather Shocks: Evidence from Portugal." Journal of Environmental Economics and Management 140 (September 2026): 103409. https://doi.org/10.1016/j.jeem.2026.103409.
Direct Link