ABSTRACT
Hurricanes and other environmental shocks punctuate the lives of poor and vulnerable populations in many parts of the world. When Hurricane Mitch struck Honduras in 1998, poor rural households lost 30–40% of their crop income and measured poverty immediately increased 5.5 percentage points, rising from 69.2% of households to 74.6% (Morris et al. 2001). In addition to these immediate income effects, Mitch also destroyed productive assets, washing away land, livestock, and plantations, compromising future earnings and livelihoods for many households. On average, these losses amounted to 15–20% of all assets held by lower wealth households according to Morris et al. (2001). While inflows of external aid to Honduras were substantial in the wake of Mitch, they amounted to less than 5% of the total losses suffered by households surveyed for this study, a finding confirmed by the Morris study. The long-term effects of disasters like Mitch on poverty depend very much then on households’ ability to maintain and rebuild their depleted stocks of productive assets in the wake of the shock.
