Do remittances make poor households more resistant to ‘natural disasters’? Evidence from the 2015 earthquake in Nepal

Abstract

Although many studies have found negative associations between GDP per capita and damage caused by nature's shocks, evidence suggests that this negative association is obscure among low-income countries. By utilizing detailed household (HH) survey data from rural areas of Nepal, we investigated whether rising HH incomes, mainly through remittances, mitigated the damages caused by the 2015 devastating earthquake to houses. We confirmed that remittances were positively associated with house structures using concrete. Our analyses, however, did not show that houses using concrete displayed strength against the seismic shocks in 2015 compared with the masonry houses that were commonly used in the study areas. Our estimates further indicated that those HHs receiving more remittances maintained houses that were more vulnerable to the 2015 earthquake. We consider that the most likely factor by which remittances weakened houses against the seismic shocks are less maintenance and minor repairs in the remittance-dependent HHs. For example, remittance-dependent HHs tend to suffer from the shortage of working-age male workers needed for maintenance work. Our results suggest that using modern construction materials with remittances does not necessarily help HHs withstand nature's shocks.