Although understanding the impact of natural disasters on income and poverty at the household level is important for disaster-prone and poverty-stricken countries, empirical works on the subject have been limited so far. A major reason behind this is that standard national household surveys generally do not include the collection of data and information on natural disasters. In the Philippines, however, the Community-Based Monitoring System (CBMS) Household Profile Survey has started to include selected natural disaster-related data and information among those that it collects and monitors.

This Policy Note provides a framework for analyzing the impact of natural disasters on household income and household poverty and empirically estimates the effects of natural disasters on household income using 2011 CBMS data for Pasay City, Metro Manila. It summarises some of the results and findings of a recent study conducted by PIDS and funded by the Economic Research Institute for ASEAN and East Asia (ERIA).

The framework explains that after the physical impact, the social impact of a natural disaster on the households follows, which is determined by the physical impact, as well as household recovery resources or coping mechanisms, extra assistance, and sociodemographic and economic factors. Both the occurrence and frequency of typhoons and/or floods have significant negative effects on household per capita income as the case of Pasay City has shown.