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Benefit in the wake of disaster: Long-run effects of earthquakes on welfare in rural Indonesia

Listed author(s):
  • Jérémie Gignoux

    ()

    (Paris School of Economics, INRA, Paris, France)

  • Marta Menendez

    ()

    (PSL, Université Paris-Dauphine, LEDa, IRD UMR DIAL, Paris, France)

We examine the long-term effects on individual economic outcomes of a set of earthquakes – numerous, large, but mostly not extreme – that occurred in rural Indonesia since 1985. Using longitudinal individual-level data from large-scale household surveys, together with precise measures of local ground tremors obtained from a US Geological Survey database, we identify the effects of earthquakes, exploiting the quasi-random spatial and temporal nature of their distribution. Affected individuals experience short-term economic losses but recover in the medium-run (after two to five years), and even exhibit income and welfare gains in the long term (six to twelve years). 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 context where disasters primarily affect physical assets. _________________________________ Nous examinons les effets économiques à long terme d’une série de tremblements de terre - nombreux, importants, mais pas dévastateurs- ayant eu lieu en Indonésie rurale depuis 1985. A partir des données individuelles longitudinales provenant d’enquêtes ménages largement représentatives, ainsi que des mesures précises de l’intensité des tremblements de terre calculées à partir de la base de données US Geological Survey, nous identifions les effets des tremblements de terre en exploitant leurs variations spatiales et temporelles quasi-aléatoires. Les individus ayant subi les tremblements accusent des pertes économiques à court terme, mais les compensent à moyen terme (après une période de deux à cinq ans), et présentent même des gains économiques à long terme (de six à douze ans). Les stocks de biens de production, notamment dans les exploitations agricoles, sont reconstitués et les infrastructures publiques améliorées, apparemment en partie grâce à l'aide extérieure, ce qui permet de rétablir les niveaux de productivité. Ces résultats tendent à rejeter la présence de trappes de pauvreté, et révèlent les bénéfices potentiels à long terme d'interventions post-catastrophe bien conçues dans un contexte où les catastrophes affectent principalement les actifs physiques.

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File URL: http://www.dial.ird.fr/media/ird-sites-d-unites-de-recherche/dial/documents/publications/doc_travail/2014/2014-15
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Paper provided by DIAL (Développement, Institutions et Mondialisation) in its series Working Papers with number DT/2014/15.

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Length: 44 pages
Date of creation: Oct 2014
Handle: RePEc:dia:wpaper:dt201415
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