Natural Disasters, Economic Resilience, and Social Outcomes: Evidence from Mexican Municipalities

This article examines the impact of natural disasters on human development and poverty in Mexican municipalities between 2015 and 2020. Using a Difference-in-Differences fixed-effects panel model with clustered standard errors, we analyze the effects of natural disasters on the Human Development Index and on extreme, moderate, and overall poverty. As part of this analysis, we examine closely whether remittances, financial inclusion, and municipal social spending moderate these impacts. Results confirm that disasters significantly reduce human development and increase poverty, particularly extreme poverty, with stronger effects from hydrometeorological events. We observe that the effects of hydrometeorological disasters are more pronounced than those of other forms of disasters, including geological ones. Meanwhile, remittances exhibit nonlinear associations with welfare outcomes; their interaction indicates only a modest attenuation of disaster effects on human development, with no significant mitigation across poverty measures, whereas financial inclusion and social spending do not display statistically significant disaster-buffering effects.