The Effect of Disaster Relief on Climate Adaptation: Evidence from Floods in Pakistan

Abstract

Extreme weather events are expected to increase with climate change. Government relief programs are designed to ameliorate the negative consequences, but moral hazard models suggest they also reduce adaptation, such as migrating from disaster-prone areas. Using difference-indifferences , we study the long-term effects of cash relief on migration after the 2010 Pakistan floods. Combining survey and population data, we show that cash transfers have two countervailing effects. As expected, they reduce migration through a moral hazard effect and by facilitating in-situ adaptation. However, they also increase migration by providing liquidity. In practice, these effects cancel each other out in flooded areas.

Keywords: Migration, Disaster Relief, Climate Adaptation, Credit, Cash Transfers