Maryia Markhvida, Brian Walsh, Stephane Hallegatte, Jack W. Baker

Natural disaster risk assessments typically consider environmental hazard and physical damage, neglecting to quantify how asset losses affect households’ well-being. However, for a given asset loss, a wealthy household might easily recover, while a poor household might suffer from major, long-lasting impacts. Ignoring such differential impacts can lead to inequitable interventions and exacerbate the impact of disasters on vulnerable populations. This research proposes a methodology for assessing socioeconomic effects of disasters that integrates the three pillars of sustainability: (1) environmental, i.e. environmental hazard and asset damage modeling; (2) economic, i.e. macro-economic modeling to quantify changes in sectors’ production and employment; and (3) social, i.e. micro-simulations of disaster recovery at the household level. The model innovates by assessing the impact of disasters on people’s consumption, considering asset losses and changes in income among other factors. We apply the model to quantify the effect of a hypothetical earthquake in the San Francisco Bay Area, considering the differential impact of consumption loss on poorer and richer households. The analysis reveals that poorer households suffer only 19% of the overall asset losses, but experience 41% of the well-being losses. The well-being losses extend over a larger region than that of severe asset losses, requiring design of policies to help people recover, in addition to reducing asset losses. Furthermore, we demonstrate that the effectiveness of specific policies varies across cities, depending on their built environment and social and economic profiles.