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Livelihood Recovery after Natural Disasters and the Role of Aid: The Case of the 2006 Yogyakarta Earthquake


  • Resosudarmo (corresponding author): Indonesia Project, Arndt-Corden Department of Economics, Crawford School of Public Policy, Australian National University, Canberra, ACT 0200, Australia. Email: Sugiyanto: Faculty of Economics and Business, Gadjah Mada University, Yogyakarta, Indonesia, Email: Kuncoro: Faculty of Economics, University of Indonesia, Depok, Jawa Barat, Indonesia, Email: Achmad Maulana was the research assistant for this paper. Sri Giyanti, Wemmy Subiyantini and Retnandari were the field coordinators for the survey. The authors would like to thank the Australian–Indonesian Governance Research Project and the Indonesia Project at the Australian National University for providing support for this research. The authors would also like to thank seminar participants at the Australian National University Arndt-Corden Department of Economics, the 11th East Asia Economic Association International Convention and the 5th Australasian Development Economics Workshop. All mistakes are the authors’ responsibility.


The 27 May 2006 Yogyakarta earthquake caused the death of more than 5700 people; more than 60 000 people were injured and hundreds of thousands lost their homes. Bantul District was most severely affected by the earthquake. This paper is an attempt to understand the determinants of livelihood recovery after this natural disaster and, in particular, the role of aid in that recovery process. A panel firm-level survey was conducted by visiting approximately 500 mostly small and micro enterprises in Bantul District on two occasions: 6 and 12 months after the earthquake. This paper argues that: (i) smaller enterprises are more resilient and so are able to recover faster; (ii) an industrial cluster system within a sub-district provides the necessary support for firms to recover; (iii) the quality of village infrastructure could be important; (iv) it is important to distribute aid as early as possible (the faster it is distributed, the better the impact on enterprises affected by the earthquake); and (v) donors should not give too much assurance of financial support to enterprises in cases where the delivery date is uncertain, but rather just provide support when it is actually available.