Decentralized Provision of Disaster Aid: Aid Fragmentation and the Poverty Implications

Abstract

Despite large-scale humanitarian aid, the headcount poverty rate continued to rise after the 2004 Indian Ocean tsunami in Indonesia. Drawing on the unique survey that tracks households over seven years, this paper examines the causes of prolonged poverty and inequality. Donor fragmentation and the weakness in monitoring the quality of in-kind aid created sizable long-term welfare costs on the recipients. While local elite capture distorts the intra-village allocation, quantile regression found that spatial unevenness in available aid, with heterogeneous quality, had a persistent negative distributional impact on the lives of the poor.