Completing Post-Earthquake Replacement Housing in Rural Armenia: Did it Induce Further Investment?

Abstract

The housing of families in rural areas of Southeastern European and CIS countries often lacks water and sewerage services and is frequently in poor physical condition. This paper explores the private investment made as a result of a donor program in rural Armenia that in 2003 completed dwellings that were replacements for those destroyed in the 1988 earthquake. The questions addressed are: did the donor-funded investment induce beneficiaries to invest their own funds additionally, and, did beneficiaries invest more than their neighbors who did not participate in the program? Data used in the analysis are from household surveys conducted in three villages where the program operated; beneficiaries were interviewed at the time the construction was finished and again six months later; non-beneficiaries (controls) were interviewed six months after the program construction was completed. The study finds that direct program beneficiaries supplemented the publicly financed improvements and that the program may have induced non-beneficiaries to invest as well. For both groups, available household economic resources were the primary determinant of investments, although non-beneficiaries living in temporary housing were discouraged from undertaking improvements.