Micro Responses to Disaster Relief Aid: Design Problems for Aid Efficacy

This article explores the selection of fishing households into receipt of aid and evaluates the effectiveness of in-kind transfers of fishing boats provided after the 2004 Indian Ocean tsunami in Aceh, Indonesia. First, besides local leaders' targeting decisions, this article highlights households' self-selection behaviors under the uncertainty of receiving aid. While the selection process is found to be affected by social capital, aid could be more efficiently targeted to productive fishermen through the community targeting approach. On the basis of this selection rule, I proceed to evaluate the impact of aid programs on recipients' fishing productivity. As the hasty construction of a homogeneous type of fishing boats created a mismatch with beneficiaries' heterogeneous fishing skills, aid effectiveness is found to be limited. A counterfactual simulation suggests that tailoring the design of in-kind transfer to recipients' fishing skills could have been a cost-effective policy to promote fishing industry recovery after the tsunami.