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Disasters and Poverty and Inequality This literature review will provide an overview of the major studies that have looked at the relationship between disasters. poverty and inequalityi. As far as disasters go, some of the most expensive disasters in history have been earthquakes, some at a magnitude that may constitute a black swan event (.{isgngn 2012). Two out of the three most expensive earthquakes in history took place in Japan. with the 2010 earthquake and tsunami costing over $360 billion and the 1995 earthquake costing $131 billion. The 2008 earthquake that took place in China was also costly. costing the country S 148 billioni Flooding is the most common natural disaster (accounting for 43% of all recorded events in the last 20 years). and the costs can also be quite extensive (Myers. 00164}. Hurricanes and cyclones are the second most frequent. (accounting for 28% of all recorded events] and in the last several decades hurricanes and cyclones have become increasingly expensive. A series of three hurricanes that hit the US in 2005 (Katrina) and 2017 (Harvey and Maria) cost the US over $350 billion. While these events incur huge costs. we focus on how disasters affect poverty rates, particularly at the household level. As Iwel will show, disasters have the biggest impact at the household level. Interestingly. the impacts of disasters on inequality are imixedi Disasters and [Poverni Not surprisingly, studies have shown that disasters have a huge impact on poverty. The more severe a disaster affects an economy, the worse the outcomes for poverty (Bui et a1, 2014]. The poor are more vulnerable in both response and recovery, and regions exposed to natural disasters may experience higher poverty and inequality than those less affected (Fothergill and Peek, 2004; Krueger and Kerri. 2010: Rodriguez-greggia, 2010; Toyaand Skidmore. 0071). Thus, the poor will bear the direct damages of disasters disproportionally at higher levels and shares of their household's income compared to richer households. Studies have shown that disasters disproportionately affect the poor because they are less likely to be prepared (Cole et a1, 2013; Region, 2004; Beijing. 2003]. They are less likely to respond to warnings to evacuate (possibly having nowhere to shelter) and they are more likely to suffer debilitating injuries or death. which may impair their future income potential. Overall, they will face greater obstacles during the response. recovery and reconstruction phase as well. Housing. supplies and equipment may be uninsured, and the losses that accrue to informal activities are not included in disaster impact assessments (Felling. 2003). The poor are more likely to hold their wealth in vulnerable forms. such as livestock. In a study that looked at the massive impact of the drought in Ethiopia in 1984-1985. it took over a decade for asset poor households to bring their livestock back to pre-famine levels (Reignn. 2004). Furthermore, as poor households that are exposed to natural hazards are often uninsured. they are more likely to reduce their investment in productive assets, and instead choose low return activities to hedge against risks. which perpetuates poverty (Cole et al. 2013). Thus. there is a negative feedback loop in which poor households are forced to settle in risky zones with cheaper rent but are likely to engage low return activities which makes it more difcult to rise from poverty. In contrast. the rich can finance reconstruction using their savings. They are also more likely to have insurance and will have better access to loans and credit. Richer households will also live in abodes that are structurally better prepared to deal with damage and can take more risks to participate in higher return. higher risk activities. Studies have noted the negative impact of oods and droughts on poverty. In a study of Mexico poverty rose by up to 3.2% due to disasters (Rodriguez-gigggiget a1, 2013 J. A study that looked at Peru from 2003 to 2008. found that one additional disaster per year increased poverty rates from 16 to 23% at the provincial level (Qiayn et al. Rosnmbeig. 2008). In the '- 'VVV city of Trinidad Bolivia. poverty rates rose by 12% after ooding took place in 2006 (Perez- DeRada and Pa: 2008). In Bangladesh which was hit by Cyclone Alla in 2009, per capita income levels plummeted from $15,000 to $10,000, poverty rates increased from 41% to 63%. and unemployment rose from 11% to 60% just in one year (425%. and Maine/k, 2013). Much of the issue for the poor is that disasters are not single discrete events. Vulnerable people will suffer repeated and mutually reinforcing shocks which will not only erode their ability to accumulate resources and savings but will also affect their ability to generate lture income (Wisner. et a]. 2004). When household assets and income generating assets (such as shops, factors. crops. cattle and arable land) are damaged or destroyed. this leads to losses in income. The poor are more likely to have informal and irregular income meaning that any disruption either directly or in the aftermath will lead to a loss of income. Some natural disasters have labour market effects as well, which leads to more permanent losses in wages (Banerjee and Duffe. 2007'). Disasters can also affect the poor by making land unsuitable for agricultural production, which impacts employment of the rural poor. Hurricanes can wash out arable land or permanently affect the salinity of the soil. In Honduras, it took over four years for banana production to return to its normal levels after Hurricane Mitch. This had a strong effect on unemployment and under-employment levels. As a result. the rate of unemployment innnediately rose to 32% in Honduras (QIMEHQL 2000). In 2008 Cyclone Nargis hit Myanmar (which killed 140.000 people) causing major damage to embankments and streams. which made the elds more prone to more ooding. more saline and more prone to pest infestation. Agricultural yields decreased as a result. Some households tried to borrow money but ended up more in debt. Disasters can also cause logistical problems in food distribution which can raise prices and lead to drops in consumption, impacting food security. Per capita consumption levels fell by 13% in Guatemala after Tropical Storm Agatha hit. Food expenditures fell by 10% (Baez et a1, 2014). This was mostly due to losses in food infrastructure and transport. which caused a 17% increase in food prices almost a year after the storm. Disasters can also destroy supplies, seeds reserves. and other productive assets which can cause food price shocks. In the case of Pakistan's deadly 2010 oods, 2.1 hectares of land were destroyed which led to problems for food production (Kirsch et a1. 2012). Richer households may escape some of these problems as studies have showed that consumption levels between those exposed and those not exposed a ood were no different for those in the top quintile. However. those exposed in the bottom quintile were consuming 80% below the minimum daily caloric intake (D3313, 2015; 29ng et a1. 2013). Another impact of disasters comes in the aftermath when critical infrastructure has been destroyed. which can have negative consequences for health and well-being. In the case of the 2010 Haiti earthquake, the contamination of the drinking water led to a massive cholera outbreak that killed almost 10.000 people (Pilkington. 2019). Thus. it is not just the disaster event that leads to high death tolls but also the aftermath (Felling. 2003). Health conditions often worsen due to overcrowded shelters and unsanitary conditions. These conditions in turn lead to poverty traps that are difficult to recover from. Another longer-term impact of disasters is that though they may lead the poor to invest less in assets and education of their children leading to longer term poverty traps (Carter and Barrett. 2006). (For information on this, see chapter 8). A study in Mexico showed that children that have been temporarily taken out of school because of a disaster. were 30% less likely to continue with their education (de Janvryet al. 2006). Temporary changes can lead to permanent shifts that come at the expense of a child's human capital and future earning potential. Disasters and Inequality Though the literature is fairly conclusive that disasters lead to greater levels of poverty, there is not consensus on how disasters impact inequality rates. Some studies have argued that disasters do not lead to huge increases in inequality rates, primarily because poor households have few material assets to lose and can quickly resume activities whereas wealthier households may lose more costly assets {Abdullah et al, 2016; Igeerthviratneand Tel, 2018). . \\Ivv vVv Another reason why inequality rates may not increase is if the state offers substantial government support for the poorer households in response (Feng et al, 2016}. In a study of oods from 1965-2004, one study found that disasters increased income inequality in the short run, but this impact dissipated after ten years (Yamamura, 2015). However, in another study looking at household level data in Vietnam, it was found that disasters reduce incomes because the poor are unable to work. The poor are also more likely to receive earnings in sectors that face downturns such as weather dependent agriculture. And though they have few assets to begin with, they are more likely to lose these assets completely. The end result is that this lowers expenditures, raising both poverty rates and inequality (Bui et al, 2014). Another study of the 2006 Typhoon that affected the Philippines echoed these results, finding that there were lower consumption rates among the poor, which raised consumption inequality at the local level {Sakai et al, 201?). When the causal arrow was reversed, it was found {in a study of 26 countries, looking at 269 earthquakes that were 6 or more on the Richter scale) that economic inequality was associated with greater fatalities (azaleas: et a1, 2005). bonclusionl Overwhehningly the evidence shows that disasters have a devastating effect on those who are the most vulnerable. The poorest people not just the most likely to lose their lives to disasters, but they are also most likely to be sucked into poverty traps. The evidence on whether or not inequality is worsened is still inconclusive and future research needs to explore this relationship in more detail. [Refel'encesl Abdullah, A.N.M., Zander, K..,K Myers, 3., Stacey, N. and Garnett, S.T._, 2016. A short-term decrease in household income inequality in the Sundarbans, Bangladesh, following Cyclone Aila. Natural Hazards, 83(2), pp.1103-ll23. Algeria; P., 2013. Are natural disasters good for economic growthp. Agra; S. and Mallick, B., 2013. The povertywlnerabilityresilience nexus: Evidence from Bangladesh. Ecological Economics, 96, p111 14-124. AlbglarBertrand, J .M., 1993. Natural disaster situations and growth: A macroeconomic model for sudden disaster impacts. World Dm'elopmenf, 2H9), pp.l4l'l-l434. Will/91 N., W, M. and Register, C.A., 2005. Earthquake fatalities: the interaction of nature and political economy. Journal ofPiililic Economics, 89(9-10), 131319011933. Am, S.A., 2012. The 2011 Japanese earthquake, tsunami and nuclear crisis. Journal of Financial Economic Policy. Baez, J., De la Fuente, A. and Santos, I.V., 2010. Do natural disasters affect human capital? An assessment based on existing empirical evidence. Berlemann, M. and Wenzel, D., 2016. Long-term Growth Effects of Natural Disasters. Economics bulletin: EB. Brink News. November 10th, 2019. The 10 Most Costly Natural Disasters of the Century. https://www.brinknews.com/the-10-most-costly-natural-disasters-of-the-century/ Accessed December 10th, 2020 Bui, A.T., Dungey, M., Nguyen, C.V. and Pham, T.P., 2014. The impact of natural disasters on household income, expenditure, poverty and inequality: evidence from Vietnam. Applied Economics, 46(15), pp. 1751-1766. Caruso, G.D., 2017. The legacy of natural disasters: The intergenerational impact of 100 years of disasters in Latin America. Journal of Development Economics, 127, pp.209-233. Cavallo, E. and Noy, I., 2011. Natural disasters and the economy-a survey. International Review of Environmental and Resource Economics, 5(1), pp.63-102. Cavallo, E., Powell, A. and Becerra, O., 2010. Estimating the direct economic damages of the earthquake in Haiti. The Economic Journal, 120(546), pp.F298-F312. Charveriat, Celine. 2000. 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Poverty and disasters in the United States: A review of recent sociological findings. Natural hazards, 32(1), pp.89-110. Ghesquiere, F. and Mahyl, O., 2010. Financial protection of the state against natural disasters: a primer. World Bank Policy Research Working Paper, (5429) Glave, M., Fort, R. and Rosemberg, C., 2008. Disaster Risk and Poverty in Latin America: The Peruvian Case Study. Helmer, M. and Hilhorst, D., 2006. Natural disasters and climate change. Disasters, 30(1), pp. 1-4.Hilker, N., Badoux, A. and Hegg, C., 2009. The Swiss flood and landslide damage database 1972-2007. Natural Hazards and Earth System Sciences, 9(3), pp.913-925. Huber, C., Finelli, L. and Stevens, W., 2018. The economic and social burden of the 2014 Ebola outbreak in West Africa. The Journal of Infectious Diseases, 218(Supplement_5), pp.$698-$704. IISD. August 20th, 2020. 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Seismic History: The Deadly 1985 Mexico City Earthquake. https://www.livescience.com/30791-deadly-1985-mexico-city-earthquake.html Loayza, N.V., Qlaberria, E., Rigolini, J. and Christiansen, L., 2012. Natural disasters and growth: Going beyond the averages. World Development, 40(7), pp. 1317-1336. Mccarthy, D., Wolf, H. and Wu, Y., 2000. The growth costs of malaria (No. w7541). National bureau of economic research. McDermott, T.K., Barry, F. and Tol, R.S., 2014. Disasters and development: natural disasters, credit constraints, and economic growth. Oxford Economic Papers, 66(3), pp. 750- 773. Myers, J. January 5th, 2016. Which natural disasters hit most frequently? World Economic Forum. https://www.weforum.org/agenda/2016/01/which-natural-disasters-hit-most- frequently/#:~:text=In%20the%20last%2020%20years,disasters%20between%201995%20an d%202015. Noy, I., 2009. The macroeconomic consequences of disasters. Journal of Development economics, 88(2), pp.221-231. Noy, I. and duPont IV, W., 2016. The long-term consequences of natural disasters-A summary of the literature.The citation must be in Harvard with a bibliography included. Please can you use google scholar, peer- reviewed? Some are from google but are peer- reviewed. Journal article not recommended. The objectives once again, Assignment 1 Literature Review: 1500 words. Students must put together a literature review based on a topic of the module. Students must cite the literature properly and must also add a bibliography. The word count is only 1500 words, NOT including the bibliography. A literature view is an overview of the literature on a topic. It helps the reader understand what have been the key findings? There is a sample on moodle, along with a PPT that offers more explanation. Criteria: - Evidence of wide, critical reading and mastery of the relevant literature and clear list of references. Demonstrates independence ofjudgement; goes far beyond description. - Well presented, and written with attention to detail regarding style, organization and fluency - Evidence of extensive research using a wide variety of sources, with clear presentation of references I am attaching the sample literature review to get an idea of it. Please can you not plagiarise anything as the University will pick up on it