Does the Relationship between Economic Development and Natural Disaster Risk Follow a 'U'-Shape Pattern? Evidence from India

This study aims to study whether development reduces damage risk from extreme climatic events such as a flood, based on the data set of reported loss and damage from major flood-affected Indian states between 1981 and 2019. Many research papers talk about specific climate extremes and their adaptation measures but there are limited empirical studies that focus on sub-national level data set. By considering the economic growth rate and different loss and damage indicators, we have divided the major Indian states into two different groups’ i.e., low-income group and high-income group. Using Zero-inflated negative binomial and negative binomial regression techniques, the study produces three major findings. First, there is an increasing trend of loss and damage indicators across the states. Second, high-income states are better flood- resilient as compared to low-income states. Third, there exists a ‘U’ shape pattern between the real economic growth rate and the natural disaster risk. Real per capita GSDP and urbanization rate reduces the loss and damages due to natural disasters while rise in density of population, more flooded areas and heavy rainfall enhance the damage risk. Further, our study supports the economic growth theory of J. S. Mill that there is a negative association between natural calamities and economic growth. The paper suggests increasing the expenditure under the Disaster Risk Reduction (DRR) program to reduce the disaster risk. Both the central as well as state governments must work together to frame policies that can reduce the natural disaster risks with sustained economic growth rate