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Many of our seminars and public events this year will continue as in person or as hybrid (online and in person) events.

Please check our website listings and Twitter feed @STICERD_LSE for updates.

Unless otherwise specified, in-person seminars are open to the public. Please ensure you have informed the event contact as early as possible.

Those unable to join the seminars in-person are welcome to participate via zoom if the event is hybrid.

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About this event

After disasters, aid and insurance payouts target physical damages. But if flooded households commute, borrow and trade, the costs of the disaster are shared with unflooded areas. These spillover effects are overlooked by standard disaster response. We study these effects using panel data on 5,100 households affected by Pakistan's large-scale 2022 floods. We separately estimate the effects of local and regional flooding on household welfare using a recentered IV approach (Boruysak and Hull, 2023) where we control for expected exposure to flooding using a hydrological model of Pakistan. Our results seem to suggest that flooding in the surrounding area predominantly drive the medium-term welfare consequences of disasters, rather than one's own flooding per se. Conditional on regional exposure, directly flooded households receive more aid, commute further for work, and maintain consumption in both survey years. By contrast, regionally flooded households receive less aid - consistent with zero-sum allocation of a fixed budget - face large reductions in agricultural employment, and by year two are drawing down savings, taking on new debt, skipping meals, and reporting worse physical and mental health. To disentangle the true cost of the disaster with endogenous aid response, we develop a spatial general equilibrium model of flooding and relief, which will allow us to back out the causal impact of flooding and simulate optimal relief policy in the presence of indirect effects.