Natural disasters and household welfare: evidence from Vietnam

Policy research working paper 5491:

This study attempts to capture both direct and indirect effects of disasters and illuminates the implicit costs associated with some of the coping strategies through a fully reduced form analysis at the household level. In particular, it examines the effect of natural disasters on household consumption in Vietnam, using disaggregated (objective) disaster measures derived from georeferenced meteorological data and controlling for some of the coping strategies. The overall objective of the study is thus twofold: (i) to develop and illustrate a methodology to construct more objective and disaggregated natural hazard and disaster maps from primary meteorological data; and (ii) to illustrate a methodology to estimate the expected welfare loss associated with natural disasters based on such natural hazard and disaster maps.

The study: (i) outlines the approach used to obtain geographically disaggregated estimates of droughts, heavy rainfall, river floods and storms with hurricane force; then (ii) reviews the empirical methodology to estimate the welfare effects; (iii) reviews the data used and section five presents the empirical findings regarding the welfare effects of different natural disasters; and (iv) concludes.