Weather Disasters, Material Losses and Income Inequality: Evidence from a Tropical, Middle-Income Country

The origins of inequality are as old as human history. This persistent phenomenon has attracted the attention of scholars and policymakers due to its repercussions for social and economic outcomes in society. However, despite national and international efforts, inequality is still prevalent within and across countries worldwide. Although many studies and debates have vastly addressed the causes of inequality, little has been said about the relationship between human and material losses and inequality and poverty. This relationship is important to understand since climate change is expected to increase the frequency and intensity of weather disasters in the near future. In this paper, I identify the effect of weather disasters on income inequality considering the case of Ecuador, a disaster-prone, unequal country. I construct a panel of provinces, municipalities and districts, including information to calculate the Gini coefficient and records of weather events in the country from 2007 to 2017. My findings suggest that weather disasters persistently affect income inequality, especially when disasters are measured in terms of damages to roads, public infrastructure and productive assets. Interestingly, human losses (i.e., the number of fatalities and injured people) and damages to productive assets show no effect on inequality levels. The results suggest the importance of disaster-resilient infrastructure as a mechanism to reduce the impacts of climate change on individual wellbeing and living conditions.