Households in the world as well as in Indonesia have become more exposed to a wide variety of vulnerabilities and risks due to the recent increase in the intensity and scope of global natural disasters. This study aims to comprehensively examine the impact of natural disasters on Indonesian’s household welfare (consumption and poverty) using the Indonesian Family Life Survey (IFLS). This study finds that households in rural areas are the most vulnerable to natural disasters; the average asset losses and medical/funeral costs from natural disasters are roughly USD 2,190/household. Our econometric models confirm that earthquakes are the most destructive disaster to affect household welfare, whereas droughts, forest fires, floods, and other disasters appear to have only moderate effects. Disaster-mitigation preparedness plays a significant role in reducing the devastating impacts of disasters and in lessening households’ vulnerability to becoming impoverished.
JEL Classification: Q54; I31; I32
Natural Disaster — Welfare — Vulnerability
Corresponding author: Campus UI Salemba, Jl. Salemba Raya No.4, Jakarta, 10430, Indonesia. Email: firstname.lastname@example.org