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Repeated Natural Disasters and Poverty in Island Nations : A Decade of Evidence from Indonesia

ABSTRACT Natural disaster impact is not altogether determined by nature but rather contingent upon the economic conditions of the receiving community. This research provides selective evidence of the impact of natural disaster risk on long-term poverty rates. By estimating a decadal panel of Indonesian household data, we complement existing static poverty analyses with a dynamic perspective. By using expected consumption as our measure of welfare, we focus on changes to both the distribution and the level of consumption from natural disaster shocks in addition to other sources of aggregate and individual risk. Aggregated to the country level, we find that natural disaster risk is (i) disproportionately impacting consumption-constrained households, (ii) increases projected poverty rates and (iii) economic development factors such as income, urbanization, and institutional strength determine natural disaster losses at the countrylevel.