Abstract
While the economic impact of natural disasters has been studied extensively, there are rather few studies that have addressed their impact on household income. This research tries to fill this gap by analyzing their actual effect on household income caused by the 2010 floods. We look at the impact of natural disasters on rural households in Pakistan after a massive flooding event in 2010. We used the difference-in-difference (DID) approach, which showed statistical significance at 1 percent. We also calculated the household distance from the rivers to see how vulnerable household income is to such kinds of shock-like floods. The results showed that the sample households living near had more impact as compared to the ones living far. Stata and Geographical Information System (GIS) software packages have been used for regression analysis and calculation of distance, respectively. This research will not only give insight in order to understand household income losses but will allow government, policymakers, and International Aid agencies to plan, make countermeasure strategies before designing post-disaster projects. After taking into account the effect of floods, which tend to have far more impact on the households, which are located near the source of the flooding. In this case, they need to focus more in terms of reconstruction of infrastructure, particularly for the households which are near these flooded areas. Firstly, this finding can give policymakers insight in terms of strategies to develop agriculture and non-agriculture employment opportunities. Secondly, it is essential to reduce income vulnerability and improve rural household finance economic conditions.
Highlights
The occurrences of flooding in Asia are common, like in China, India, and Bangladesh, but Pakistan has been identified as one of the most vulnerable countries to climate risks and broader hazards in Asia (Kreft et al., 2016)
We explore whether variations in distance from flooding sources have some significance in terms of income change among rural households from Pakistan
We estimate the difference-in-differences model in equation (1) employing the following random effect model that captures the structural change for household in time due to flood exposure: In the literature, we studied many perspectives; this work will adopt a theoretical definition that is consistent with the idea of the rural household as the probability of falling income after natural disasters
Summary
The occurrences of flooding in Asia are common, like in China, India, and Bangladesh, but Pakistan has been identified as one of the most vulnerable countries to climate risks and broader hazards in Asia (Kreft et al., 2016). Vulnerability is defenseless, insecurity, and exposure to events like natural disasters (Chambers, 1989). The study took the 2010 flooding in Pakistan as our case study to analyze the extent of losses to rural household's income after these natural disasters. This will help us cope with the potential losses, either temporary or permanent. The rest of the paper is structured as follows: Section II provides information about the background flooding event of 2010, discussing the modeling, empirical strategy, and data used in this paper, Section III consists of results in which we described the regression, difference-in-difference (DID).
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