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Distributional Impacts of Disaster Recovery: Sri Lankan Households a Decade after the 2004 Indian Ocean Tsunami

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Abstract

This paper investigates consequence of 2004 tsunami on income distribution in Sri Lanka, using quantile Difference-in-Difference and Change-in-Change methods, and other inequality measures. The analysis finds that the income of affected households in the entire distribution has recovered, with low-income household’s income increases by a higher proportion as compared to the income increase of higher income households. Similar pattern appears for consumption inconsistently across empirical methods. Nonetheless, the study does not find evidence for increasing inequality associated with long-lasting recovery from the catastrophic tsunami in Sri Lanka.

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Notes

  1. Recovery is defined in this paper as ability to reduce impact of future disaster. Recovery is measured by the current impact of disaster on wellbeing.

  2. This is a remarkably small decrease in arrivals as compared to the reduced earnings from the tourism sector in the post disaster. The tourist arrivals account for every single visit with at least a single overnight stay in the country. International aid played a major role in the post disaster reconstruction in Sri Lanka and aid agency staff visiting the country after the disaster were most likely included in these counts.

  3. We thank Professor Blaise Melly for generously sharing the CIC STATA codes. Researcher’s work on this method is still in progress.

  4. This pattern of recovery may closely associates to the ending of the internal conflict prevailed in Sri Lanka in 2009 which is well explained in De Alwis and Noy (2019)

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Acknowledgements

I thank Ilan Noy and Harold Cuffe for their assistance and comments, and Blaise Melly for sharing their stata codes of CIC analysis.

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Authors and Affiliations

  1. School of Economics and Finance, Victoria University of Wellington, Wellington, New Zealand

    Diana De Alwis

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  1. Diana De Alwis
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Correspondence to Diana De Alwis.

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Appendix

Appendix

Table 5 Components of household income and consumption
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Table 6 Robustness check (Placebo test)
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Fig. 7
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Tsunami affected districts in Sri Lanka. Source: Department of Census and Statistics (2005)

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Fig. 8
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Average household consumption expenditure by quantile over the years

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Fig. 9
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Average household net cash income by quantile (consumption) over the years

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Fig. 10
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Distribution of consumption

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Fig. 11
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Distribution of income

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Fig. 12
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Distribution of consumption employment status and income source

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Fig. 13
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Income Lorenz curve of treatment group

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Fig. 14
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Income Lorenz curve of control group

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Fig. 15
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Consumption Lorenz curve of treatment group

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Fig. 16
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Consumption Lorenz curve of control group

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Fig. 17
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Lorenz curve for all districts -Income

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Fig. 18
figure 18

Lorenz curve for all districts -consumption

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De Alwis, D. Distributional Impacts of Disaster Recovery: Sri Lankan Households a Decade after the 2004 Indian Ocean Tsunami. EconDisCliCha 4, 195–222 (2020). https://doi.org/10.1007/s41885-020-00058-z

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