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Floods, earthquakes and hurricanes cause significant loss of life and destruction of property in many countries. The incidence of such disasters has increased in recent years. There is a growing consensus, however, that being better prepared against natural disasters can be equally or more effective than immediate aid and relief.
Several studies have shown that migrants send additional remittances after severe shocks. However, there is little evidence of whether and how they help households prepare for natural disasters. In a recent paper for a forthcoming World Bank-UN assessment of the economics of disaster risk reduction, we analyze cross-country macroeconomic data as well as a number of household surveys to examine the "ex-post" response of remittances to natural disasters and their contribution to "ex-ante" preparedness.
The macro data shows that remittances increase during disasters in countries that have a larger number of emigrants. Household survey data for Bangladesh shows that per capita consumption was higher in remittance-receiving households than in others after a large flood in 1998. Remittance-receiving households in Ethiopia seem to use cash reserves rather than sell livestock to cope with drought. Similar households in Burkina Faso and Ghana are more likely to have a concrete house and greater access to communication equipment. These findings highlight the unique role of remittances in building buffer against disasters.
National and international agencies involved in providing humanitarian assistance and aid can facilitate restoration of financial infrastructure and money transfer facilities so that diaspora members can continue sending remittances and aid to their families and communities. Official agencies can also tap into the diaspora communities to raise funds for strengthening community infrastructure (schools, health centers etc.) so that they are more disaster-resilient.