Investigation of the Effect of Natural Disasters on Household Consumption Patterns in Iran Using a Difference-in-Difference Model

In recent centuries, many natural disasters such as floods and droughts have appeared and have had many adverse effects on many countries. Natural disaster is one of the significant environmental challenges globally and has serious socioeconomic consequences in countries. In the recent literature, natural disasters have also been regarded as the greatest ongoing threat to human societies. The frequency and severity of natural disasters such as droughts and floods have shown an increasing trend around the globe.  Evidence points to the fact that these natural disasters have significant adverse effects on crop yield, food security; there is a need to conduct micro-level studies that help generate empirical evidence on the impact of such disasters on the indicators of food security and food consumption in developing countries. Iran is one of the most disaster-prone regions in the world. Natural disasters frequently influence it and cause devastating damage. Depending on their intensity and duration, these disasters can affect consumer behavior. This study examines the effects of floods consumption in Iran in 2019 and 2020. For this purpose, the Difference-In-Differences (DID) model was applied to analyze. The data were obtained from the Statistical Center of Iran and covered the 3021 urban and rural households in Fars, Kerman, Khuzestan, Hamedan, Golestan, and Esfahan provinces. The results show that families who experience the shock of floods reduce food consumption. In other word, floods reduce all group of food consumption quantity. Results show that floods reduce tobacco expenditures, though increase, energy, transportation, and health care expenditures.