Floods and Household Welfare: Evidence from Southeast Asia

Abstract

This research uses a rich panel data set of household surveys and external long-term flood data, extracted from satellite images, to complete a puzzling picture of the effects of floods on household welfare. Floods impose a mixed impact on households. On the one hand, the floods reduce household incomes dependent on natural sources; while on the other hand, floods push farmers out of the fields to seek extra incomes from non-agricultural activities. In addition, the floods significantly increase some types of expenditure. The finding of a lower household subjective wellbeing score reaffirms all these results. Further, this research shows the efforts that rural households are making to cope with the effects of flooding. They employ both formal and informal coping mechanisms; however, only financial remittances are shown to be significantly effective in providing relief.