Husby, Trond de Groot, Henri L.F. Hofkes, Marjan W. Dröes, Martijn I.
Year of Publication:
53rd Congress of the European Regional Science Association: "Regional Integration: Europe, the Mediterranean and the World Economy", 27-31 August 2013, Palermo, Italy
Large shocks, such as natural disasters, are often found to have little or no effect on the equilibrium distribution of economic activity across space. Two apparently competing theoretical explanations for this phenomenon are the increasing returns theory and the locational fundamentals theory. This study investigates the population dynamics resulting from the flood that hit the Netherlands in 1953 and from the mitigation measures that followed it.A dynamic difference-in-differences analysis reveals that the flood had an immediate negative impact on population growth, but limited long term effects. The mitigation efforts, gathered under the Deltaworks Programme, are on the other hand found to have had positive effects that are persisting through time. Our results are consistent with both the theory of increasing returns and that of locational fundamentals. The results also suggest that the combined long term effect of the flood in 1953 and the mitigation measures that followed was an increased concentration of population in vulnerable areas.