“The real economic impact of natural disasters: accounting for distributional impacts and implications for poverty”

The impact of a disaster on a country or a community is often measured using one aggregate metric: the total cost of the physical damages. While relevant to estimate financial needs for the reconstruction, this single number hardly represents the impact on the poorest people and households, who suffer disproportionally from disaster but, because they own very little, experience little financial damages.

Stephane Hallegatte, during his presentation, proposed a different approach to measure the severity of disasters, one based on microsimulations in which disaster impacts are represented at the household level. Hallegatte used examples from multiple countries and disasters to illustrate the results and their policy implications. He showed how better accounting for distributional and poverty impacts affects (and improves) spatial prioritization of interventions (where to invest?) as well as the sectoral prioritization of interventions (in which sector to invest?).