The Household Response to Persistent Natural Disasters: Evidence from Bangladesh

Recent literatures examine the short-run effects of natural disasters on household welfare and health outcomes. However, less advancement has been observed in the use of self-reported data to capture the short-run disaster-development nexus in least developed countries' with high climatic risks. This self-identification in the questionnaire could be advantageous to capture the disaster impacts on households more precisely when compared to index-based identifications based on geographical exposure. In this paper, we ask: “what are the impacts on household income, expenditure, asset, and labor market outcomes of recurrent flooding in Bangladesh?” We examine the short-run economic impacts of recurrent flooding on Bangladeshi households surveyed in year 2010. In 2010 Household Income and Expenditure Survey (HIES), households answered a set of questions on whether they were affected by flood and its likely impacts. We identify treatment (affected) groups using two measures of disaster risk exposure; the self-reported flood hazard data, and historical rainfall data-based flood risk index. The paper directly compares the impacts of climatic disaster (i.e., recurrent flooding) on economic development. We further examine these impacts by pooling the data for the years' 2000, 2005, and 2010 and compare the results with our benchmark estimations. Overall, we find robust evidence of negative impacts on agricultural income and expenditure. Intriguingly, the self-reported treatment group experienced significant positive impacts on crop income.