Saving Lives with Pre-Financed Rules-Based Disaster Aid: Evidence from Mexico

Developing economies are not disproportionately exposed to natural disasters, but they experience significantly more deaths. Exploiting a discontinuity in the eligibility rules to Mexico’s pre-financed indexed disaster fund (Fonden), I show that accelerated reconstruction of public infrastructure can fully reduce postdisaster excess mortality in the short-run and up to 75 percent two years after. I also find that Fonden’s impact is concentrated in areas with medical infrastructure and among conditions responsive to basic medical interventions. These findings suggest that Fonden operates by restoring access to health services after a disaster. Annual benefits from Fonden amount to 197 thousand life-years saved. (JEL: G22, H12, H84, Q54, I15, O18.)