Quantification of disaster impacts through household well-being losses

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 quickly recover, while a poor household might suffer major, long-lasting impacts. This research proposes a methodology to quantify disaster impacts more equitably by integrating the three pillars of sustainability: environmental (hazard and asset damage), economic (macro-economic changes in production and employment) and social (disaster recovery at the household level). The model innovates by assessing the impacts of disasters on people’s consumption, considering asset losses and changes in income, among other factors. We apply the model to a hypothetical earthquake in the San Francisco Bay Area, considering the differential impact of consumption loss on households of varying wealth. The analysis reveals that poorer households suffer 19% of the asset losses but 41% of the well-being losses. Furthermore, we demonstrate that the effectiveness of specific policies varies across cities (depending on their built environment and social and economic profiles) and income groups.