Evidence and Policy Lessons on the Links between Disaster Risk and Poverty in Latin America

Extreme climate-related events have a direct impact on the welfare of households. The frequency and magnitude of those shocks appear to be closely linked to increasing vulnerability of households and communities in developing countries. Yet, the link between natural disasters and living standards is complex and causality is difficult to capture empirically. Among other reasons, there is a two-way relationship between the vulnerability to natural disasters and poverty, and disentangling the direction of the causal impacts is rather challenging, especially in terms of the intensity of the effects of the events and not only their incidence. This paper pursued two main goals. First, the empirical analysis estimated the relation between natural events and social indicators at the local level, establishing a causal link whenever possible. Second, analysis was carried out at the household level in order to determine the potential role played by coping mechanisms to influence long-term impacts on welfare.