Abstract
This study estimates the effect of natural disasters on Vietnamese income per capita in both short and long-term. The analysis also evaluates the effects by sources of income including income from salary; income from agriculture, fishery, forest; and income from industry, construction, trade, and services. Typhoon Durian happened in December 2006 in southern provinces of Vietnam is chosen for the comparative case study. The analysis applies the Synthetic control method (SCM) to construct a counterfactual with respect to two different control groups and conducts a permutation test for the estimated values. The results show that typhoon Durian decreased aggregate income per capita of the affected region and the effect was long lasting. The reduction of monthly income per capita was estimated to be 56,925 VND which accounts for 7.9% of the total income. The most affected source of income is from agriculture, forestry, and fishery.
Highlights
Research on the impact of natural disasters often focus on the short-term, leaving much of the long-term impact unexplored (Noy and DuPont, 2018; Fakhry et al, 2018; Chehabeddine, Tvaronavičienė, 2020)
Different from previous studies which are focused on the impact of natural disasters on aggregate income or total income, this paper investigates effects of typhoon Durian by income source, including income from salary; income from agriculture, fishery, forest; and income from industry, construction, trade and services
Synthetic control method (SCM) is considered a quasi-experiment in which the result is the difference between treatment group and control group
Summary
Research on the impact of natural disasters often focus on the short-term, leaving much of the long-term impact unexplored (Noy and DuPont, 2018; Fakhry et al, 2018; Chehabeddine, Tvaronavičienė, 2020). One could speculate that in the short-term, farms destroyed by disasters have no harvesting, factories damaged by disasters have little output and a negative impact on output is inevitable. Speculation of long-term impacts of natural disasters is more complex. In the long-term, new crops will likely be planted on farms, damages at factories will likely be remedied and output will likely recover to equilibrium. Damage caused by natural disasters may enable better investment in new technology, and allow to achieve higher output in the longterm. Long-term impacts of natural disasters can be positive, negative or neutral based on the post-disaster relief and post-disaster investments (Rempel, 2010)
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