Resilience in the Wake of Disaster: The Role of Social Capital in Mitigating Long-Term Well-Being Losses

Climate change is intensifying the frequency and severity of weather-related natural disasters. These events generate significant monetary and non-monetary costs, undermining individual and societal well-being. Using a nationally representative longitudinal dataset from Australia, this study explores the dynamics of well-being before, during, and after natural disasters, with a particular focus on the mediating role of social capital. We employ an event-study design with individual fixed effects to capture both immediate and long-term effects of natural disasters on four critical dimensions of well- being: financial satisfaction, safety satisfaction, mental health, and psychological distress. Our findings reveal that the adverse impacts of natural disasters are profound and long-lasting, persisting in some cases for over 6–7 years, with well-being implications exceeding $1,500,000 in equivalent losses. We find that social capital emerges as a powerful buffer, significantly mitigating declines in safety satisfaction and mental health while reducing psychological distress both during and after disasters.