cyclones such as hurricanes, are more prevalent. In South America, floods occur more frequently, and droughts have an important impact affecting people. Following EM-DAT, we found that the five most common and impactful natural disasters in the region are floods, tropical storms (including tropical cyclones such as hurricanes), droughts, earthquakes, and landslides.<sup>2</sup> Thus, we use objective measures of these five hazards in the model, but unlike Hill and Porter (2017), we do not model or draw the distribution of these future shocks. Our cross-sectional measures indicate the potential damage from natural hazards based on a probabilistic analysis which is interpreted as a proxy of future aggregate shocks. We also do not include idiosyncratic shocks in the model. Although, we explore them when we perform the Chaudhuri procedure as a robustness exercise.

Finally, this study aims to provide disaggregated data to policy makers to build policies to reduce vulnerability to poverty due to natural hazards in LAC. In this paper, we address the effects of climate risk in the region, which is a relatively unexplored aspect in the region. While there have been some macro-level papers relying on simulations such as Jafino et al. (2020), Solano-Rodríguez et al. (2021), Banerjee et al. (2021) or on agricultural and livestock productivity such as Reyer et al. (2017) and Lachaud et al. (2022) simulations; our main contribution lies in a micro-level perspective focusing on households. Caruso (2017) explores natural disasters’ long-run effects in the region in the 20th century at the micro level exploiting census data. And other studies focus on individual countries within the region or specific types of natural hazards (e.g., Albert, Bustos, and Ponticelli, 2023; Acevedo et al., 2023; Rude and Robayo-Abril, 2023; Aguilar-Gomez et al., 2022). However, there is a lack of comprehensive understanding regarding climate risk in the overall region in the present context. We contribute to addressing this gap by choosing various natural hazards across different countries in the region. The paper's main contribution is the analysis of vulnerable households' coping and adaptation mechanisms at the micro-level.

The paper is structured as follows. The next section presents the conceptual framework and the methodology. Section 3 describes the data, and section 4 presents the results. Section 5 summarizes the main findings and presents a final discussion.

# **2. Measuring vulnerability to poverty including natural hazards in LAC**

# **Methodology**

Building on the definition of vulnerability, we propose a model to measure vulnerability to poverty, including natural disasters and exposure in the region. Although a household's vulnerability is an ex-ante condition and not directly observable until the adverse shock occurs (Ravallion, 1988; Chaudhuri, 2003), it is possible to summarize it as the probability of the household's welfare falling below a minimum standard in the future.

> 2 Hurricanes are a type of tropical cyclones in the Atlantic Ocean. From now on, we will refer to cyclones instead of hurricanes to follow the terminology of the aggregate natural hazard datasets used in the analysis. Following, ThinkHazard! methodology, cyclones, tropical storms, hurricanes, and typhoons, despite their distinct names, all describe the same hazard: a non-frontal storm system characterized by a low-pressure center, spiral rain bands, and strong winds. Thus, we decide to use the term cyclones to encompass a broader scope of this hazard.

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