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Fiscal Decentralization and Natural Disaster Mitigation: Evidence from the United States
Author(s) -
Miao Qing,
Shi Yu,
Davlasheridze Meri
Publication year - 2020
Publication title -
public budgeting and finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.694
H-Index - 30
eISSN - 1540-5850
pISSN - 0275-1100
DOI - 10.1111/pbaf.12273
Subject(s) - decentralization , natural disaster , natural resource , government (linguistics) , investment (military) , flooding (psychology) , business , panel data , damages , local government , economics , public economics , economic policy , finance , public administration , political science , geography , market economy , politics , psychology , linguistics , philosophy , econometrics , meteorology , law , psychotherapist
How decentralized government structure influences public service delivery has been a major focus of debate in the public finance literature. In this paper, we empirically examine the effect of fiscal decentralization on natural disaster damages across the U.S. states. We construct a unique measure of decentralization using state and local government expenditures on natural resources, which include investment in flood control and mitigation measures, among others. Using state‐level panel data from 1982 to 2011, we find that states that are more decentralized in natural resource expenditures have experienced more economic losses from floods and storms. This effect is only pronounced in states that are at higher risks of flooding. Our findings suggest that fiscal decentralization may lead to inefficient protection against natural disasters and provide implications for the assignment of disaster management responsibilities across different levels of government in the U.S. federal system.