The economic footprint of environmental hazards: long-term household spending impacts in Mexico by disaster type and severity

Abstract Mexico ranks among the most disaster-prone countries worldwide, yet the differentiated effects of natural hazard-induced disasters on household expenditures remain insufficiently understood. This study examines the long-term impacts of diverse natural hazards—including geophysical, hydrological, meteorological, and climatological events—on key household spending categories critical to well-being, such as housing, education, health, and food, over the past two decades in Mexico. By addressing significant gaps in the literature, this research provides novel insights into how distinct types and severities of natural hazard-induced disasters reshape household decision-making and socio-economic outcomes in a highly vulnerable context. This study is the first to analyze how various types of natural hazards influence spending in critical areas such as education, housing, self-consumption and health, offering a unique perspective on the socioeconomic repercussions of natural hazard-induced disasters. At the core of this study lies a municipal-level panel dataset that integrates environmental disaster records with detailed household microdata, enabling a comprehensive spatial and temporal analysis of their impacts. The results reveal substantial heterogeneity in expenditure responses across categories, driven by hazard type and event severity, with important implications for household welfare. These findings underscore the critical need for targeted policy interventions to mitigate socioeconomic vulnerabilities and enhance adaptive capacity in the face of increasing environmental shocks associated with global change.