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Enterprise Recovery Following Natural Disasters


  • Suresh De Mel
  • David McKenzie
  • Christopher Woodruff


Using data from surveys of enterprises in Sri Lanka after the December 2004 tsunami, the authors undertake the first microeconomic study of the recovery of the private firmsin a developing country following a major natural disaster. Disaster recovery in low-income countries is characterized by the prevalence of relief aid rather than of insurance payments; the data show this distinction has important consequences. The data indicate that aid provided directly to households correlates reasonably well with reported losses of household assets, but is uncorrelated with reported losses of business assets. Business recovery is found to be slower than commonly assumed, with disaster-affected enterprises lagging behind unaffected comparable firms more than three years after the disaster. Using data from random cash grants provided by the project, the paper shows that direct aid is more important in the recovery of enterprises operating in the retail sector than for those operating in the manufacturing and service sectors.
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Suggested Citation

  • Suresh De Mel & David McKenzie & Christopher Woodruff, 2012. "Enterprise Recovery Following Natural Disasters," Economic Journal, Royal Economic Society, vol. 122(559), pages 64-91, March.
  • Handle: RePEc:ecj:econjl:v:122:y:2012:i:559:p:64-91 DOI: j.1468-0297.2011.02475.x

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    Cited by:

    1. Leonardo Becchetti & Stefano Castriota & Pierluigi Conzo, 2012. "Bank strategies in catastrophe settings: empirical evidence and policy suggestions," Econometica Working Papers wp43, Econometica.
    2. Kirchberger, Martina, 2017. "Natural disasters and labor markets," Journal of Development Economics, Elsevier, vol. 125(C), pages 40-58.
    3. Hayakawa, Kazunobu & Matsuura, Toshiyuki & Okubo, Fumihiro, 2015. "Firm-level impacts of natural disasters on production networks: Evidence from a flood in Thailand," Journal of the Japanese and International Economies, Elsevier, vol. 38(C), pages 244-259.
    4. Kurosaki, Takashi, 2017. "Household-Level Recovery after Floods in a Tribal and Conflict-Ridden Society," World Development, Elsevier, vol. 94(C), pages 51-63.
    5. Jean-François Maystadt & Valerie Mueller & Ashwini Sebastian, 2016. "Environmental Migration and Labor Markets in Nepal," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 3(2), pages 417-452.
    6. Martina Kirchberger, 2014. "Natural disasters and labour markets," CSAE Working Paper Series 2014-19, Centre for the Study of African Economies, University of Oxford.
    7. Goetz von Peter & Sebastian von Dahlen & Sweta C Saxena, 2012. "Unmitigated disasters? New evidence on the macroeconomic cost of natural catastrophes," BIS Working Papers 394, Bank for International Settlements.
    8. Martina Kirchberger, 2014. "Natural Disasters and Labour Markets," Economics Series Working Papers WPS/2014-19, University of Oxford, Department of Economics.
    9. Sawada, Yasuyuki & Takasaki, Yoshito, 2017. "Natural Disaster, Poverty, and Development: An Introduction," World Development, Elsevier, vol. 94(C), pages 2-15.
    10. Kurosaki, Takashi, 2015. "Household-Level Recovery after Floods in a Tribal and Conflict-Ridden Society," CEI Working Paper Series 2015-5, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
    11. Florence Kondylis & Valerie Mueller, 2014. "Economic consequences of conflict and environmental displacement," Chapters,in: International Handbook on Migration and Economic Development, chapter 14, pages 388-424 Edward Elgar Publishing.

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