Quantification of disaster impacts through household well-being losses

Abstract

Natural disaster risk assessments typically consider environmental hazard and physical damage, neglecting to quantify how asset losses affect households' well-being. However, for a given asset loss, a wealthy household might easily recover, while a poor household might suffer from major, long-lasting impacts. Ignoring such differential impacts can lead to inequitable interventions and exacerbate the impact of disasters on vulnerable populations. This research proposes a methodology for assessing socioeconomic effects of disasters that integrates the three pillars of sustainability: (1) environmental, i.e. environmental hazard and asset damage modeling; (2) economic, i.e. macro-economic modeling to quantify changes in sectors' production and employment; and (3) social, i.e. micro-simulations of disaster recovery at the household level. The model innovates by assessing the impact of disasters on people's consumption, considering asset losses and changes in income among other factors. We apply the model to quantify the effect of a hypothetical earthquake in the San Francisco Bay Area, considering the differential impact of consumption loss on poorer and richer households. The analysis reveals that poorer households suffer only 19% of the overall asset losses, but experience 41% of the well-being losses. The well-being losses extend over a larger region than that of severe asset losses, requiring design of policies to help people recover, in addition to reducing asset losses. Furthermore, we demonstrate that the effectiveness of specific policies varies across cities, depending on their built environment and social and economic profiles. 1/20This is a non-peer reviewed preprint submitted to EarthArXiv and housing services, cost of reconstruction, and use of resources such as savings or insurance payouts in the process of recovery.Measuring disaster impacts with utility instead of consumption allows one to account for the differential impact of losing $1 in consumption, as a function of wealth. While richer individuals can reduce their consumption with limited impact on their well-being, poorer individuals cannot. At the extreme, the very poor have to reduce consumption of food, education, or health care. The immediate impact of such cuts on well-being can be large, and for children can have consequences that last a lifetime 16,17 .The well-being quantification methodology in this paper integrates the three aspects of sustainability: environmental (the impact of the hazard), economic (the cost of damages and implication for jobs and income), and social (the distributional impact of the shock and the role of socioeconomic factors). It builds on previous research 18,19 and uses a multi-stage simulation that explicitly quantifies damages to the built environment, post-disaster dynamics of economic sectors, and changes in household consumption across socioeconomic groups, while propagating uncertainties associated with disasters modeling. While previous approaches for evaluating disaster management policies typically focu...

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