Economics serving society

(G-MonD) Note n°16 “Can natural disasters have positive consequences ? Evidence from earthquakes in rural Indonesia”

Jérémie Gignoux and Marta Menéndez

Title: “Can natural disasters have positive consequences ? Evidence from earthquakes in rural Indonesia”
References: Note G-MonD n°16, June 2016
Abstract:

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Using longitudinal household surveys together with precise measures of – numerous, large, but mostly not extreme – earthquakes that occurred in rural Indonesia since 1985, we find evidence that affected individuals experience short-term economic losses, but recover in the medium run, and even exhibit income and welfare gains in the long term. The stocks of productive assets, notably in farms, get reconstituted and public infrastructures are improved, seemingly partly through external aid, allowing productivity to recover. These findings tend to discount the presence of poverty traps and exhibit the potential long-term benefits from well-designed post-disaster interventions in contexts where disasters primarily affect physical assets.