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Natural Disasters Exacerbate Wealth Inequality

A study by Junia Howell and James Elliott, Damages Done: The Longitudinal Impacts of Natural Hazards on Wealth Inequality in the United States, reveals that natural disasters exacerbate wealth inequality. White households and those with more education gain wealth after natural disasters, while minority households and renters lose wealth. The findings indicate that the residents of an area are not equally impacted by a natural disaster and that policy-makers need to rethink how assistance to disaster-impacted households is provided.

The authors tracked data on the wealth of nearly 3,500 families, county-level natural hazards damages, Federal Emergency Management Agency (FEMA) aid, neighborhood socioeconomic factors, and county size for every U.S. county from 1999 to 2013.

The authors’ model indicates that in counties with extensive hazard damages of at least $10 billion from 1999 to 2013, white households gained $126,000 in wealth, on average. By comparison, black households lost an average of $27,000 in wealth and Hispanic households lost $29,000. The authors found a similar pattern with homeownership and education. Homeowners gained wealth, while renters lost it. Households with more education gained more wealth after disasters than households with less education.

FEMA assistance contributed to these wealth disparities. Counties that saw more FEMA assistance (net of local damages) saw even greater racial disparities in wealth accumulation. FEMA assistance is important to help affected households’ recovery after disaster, but authorities need to rethink how assistance is distributed. The authors contend that the current approach to disaster recovery is “built largely around the restoration of private property, and thus, wealth.” They caution this approach is incomplete and inequitable.

A map of the estimated growth in the white-black wealth disparity attributable to natural hazards damages is available at: https://bit.ly/2PmKpcJ

Damages Done: The Longitudinal Impacts of Natural Hazards on Wealth Inequality in the United States is available at: https://bit.ly/2LCvt7k