Conference Agenda

Disaster recovery can reshape local economic incentives and shift adjustment costs onto natural capital. We study this in rural Indonesia, where earthquakes repeatedly damage assets and infrastructure in forested places. We combine remotely sensed forest loss data with ground-shaking maps for 638 earthquakes between 2001 and 2014 in a community-year panel of more than 50,000 communities. The empirical design compares within-community changes in forest loss after severe shaking, conditional on community and year fixed effects, long-run seismic risk, and initial forest cover. Results show a broad land-use response in the wake of a disaster. Communities exposed to Modified Mercalli Intensity VII/VIII shaking experience about 35% higher forest losses. Land-use evidence points to post-shock forest conversion, including selected oil-palm outcomes and residual other deforestation. This is accompanied by a rise in violent resource and land-rights conflicts, while population and nightlight outcomes do not support broad local growth or large in-migration as the main explanation. The findings show that disaster recovery in forested communities can create environmental externalities when shocks redirect adjustment pressure toward forests.