Investigation of the Effect of Natural Disasters on Household Demand Using an EASI Demand System

Abstract

In recent centuries, many natural disasters such as floods and droughts have appeared and have had many adverse effects on many countries. Natural disaster is one of the major environmental challenges in the world and has serious socioeconomic consequences in countries. Evidence points to the fact that these natural disasters have a significant negative impact on crop yield, food security, there is a need to conduct micro-level studies that help generate empirically evidence on the effect of such disasters on the indicators of households demand in developing countries. Iran is one of the most disaster-prone regions in the world. Natural disasters frequently impact it and cause devastating damage. Depending on their intensity and duration, these disasters can impact consumer demand. Therefore, this study examines the effects of floods on food and non-food demand in Iran from 2019 to 2020. For this purpose, ‌the EASI demand system model was used to analyze. The data were obtained from the Statistical Center of Iran and covered urban and rural households in five provinces of Fars, Khuzestan, Mazandaran, Lorestan, and Golestan. The results show that households who experience the shock of floods reduce food, energy, and hotel and restaurant demand while increasing transportation, home appliance, and health demand.