The Impact of Vulnerability and Income distribution on Inequality and Poverty: Analysis of Flood and landslides in Vulnerable Locations of Nepal

Natural disaster is a key exogenous driver to unpredictable risk of uncertainty and cost of economic loss. GDP loss at national economy and welfare loss at household level in the world are major cost of such disaster. The cost that is a burden to households could change on income distribution and household income vertically and horizontally and then their livelihood and welfare. This relationship makes a curiosity whether natural disaster could change income distribution at household level in developing countries, where socio economic vulnerable groups exist so that alternative policy option can be explored to minimize such bad effects on socio economic vulnerable groups and their livelihood and welfare. This paper measures empirically the income distribution effects of natural disaster at household level based on primary data sets collected through household survey in Sot Khola water basin by using Gini coefficient method. As reference line, inequality and poverty level are employed. Comprehensive and comparative analytical tools are used for testing above research question based on two periodic data sets and information. As a result, the water shed areas had higher inequality and poverty level than national inequality line (0.33) before natural disaster. The residents were socio economically and geographically vulnerable. The natural disaster damaged heavily tangible and non-tangible assets, houses, household utensils, documents, dresses, valuable indigenous materials, emotions and food grains. Thus, the vulnerable households lost inferior their assets and insufficient food grains. Its distribution was acute at higher and lower altitude watershed areas and households than middle areas and households. In general, higher altitude watershed areas and households were more vulnerable than middle and then lower altitude watershed areas and households. Such acuteness of economic loss redistributed their inequality and poverty level in such a way with the cost of risk and uncertainty. Thus, the vulnerable population became more vulnerable and the non-vulnerable population with their adaptive capacity became less vulnerable. Thus, the natural disaster has negative income distribution effect at household level, particularly at the vulnerable household with expansion of inequality and poverty. Therefore, natural disaster results the growth of vulnerability at rural hilly areas of the river basin.