The real economic costs of COVID-19: Insights from electricity consumption data in Hunan Province, China

• Published in: Energy economics Vol. 105; p. 105747
• Main Authors: Ai, Hongshan, Zhong, Tenglong, Zhou, Zhengqing
• Format: Journal Article
• Language: English
• Published: Netherlands Elsevier B.V 01.01.2022; Elsevier Science Ltd
• Subjects: Business cycles; Consumption; Coronaviruses; Costs; COVID-19; Departments; Difference-in-differences; Economic development; Economic fluctuations; Economic growth; Economic impact; Economic models; Economic recovery; Electricity; Electricity consumption; Empowerment; Energy economics; Government agencies; Habits; Heterogeneity; Impact analysis; Infrastructure; Internet; Manufacturing; Pandemics; Technology; The real economic cost; Transportation industry; Viral diseases; Viruses; China; Hunan China; COVID-19; National Bureau of Statistics of the People's Republic of China; gross domestic product; Electricity consumption; The real economic cost; National Health Commission of the People's Republic of China; Difference-in-differences; Chinese New Year; Chinese New Year, (CNY); gross domestic product, (GDP); difference-in-differences, (DID); National Health Commission of the People's Republic of China, (NHC); National Bureau of Statistics of the People's Republic of China, (NBS)
• ISSN: 0140-9883; 1873-6181
• DOI: 10.1016/j.eneco.2021.105747

The COVID-19 pandemic has caused extreme economic fluctuations. However, the magnitude of the economic cost of this extreme event remains challenging to quantify. The impact of the COVID-19 pandemic on the economy is estimated through firm-level electricity consumption data from Hunan province, China. Specifically, a difference-in-differences (DID) model was employed to estimate the real economic costs. The results indicate that electricity consumption in Hunan Province dropped by 27.8% during the early stage of the COVID-19 pandemic. Manufacturing and the transportation industry suffered the most severe declines. Electricity consumption began to recover after the virus was controlled. We suggest that government departments should take full measures to prevent and control COVID-19 outbreaks and associated economic impacts, in conjunction with preparing for economic recovery, deploying targeted measures to support different industries in response to the heterogeneity COVID-19 pandemic impacts. The COVID-19 has changed people's living habits and brought a new direction, the Internet industry, of economic growth. Hunan Province needs to accelerate the digital empowerment of traditional industries, develop the Internet, 5G technology, and new digital infrastructure to offset the negative impact of the COVID-19 pandemic. Electricity consumption is an applicable index in estimate the real economic cost of extreme events. •Estimating the economic cost of COVID-19 in Hunan Province China.•Manufacturing and the transportation industry suffered the most severe decline.•Electricity consumption to estimate the economic impact of extreme events.•Difference-in-differences (DID) model was employed to estimate the economic impacts.