layers, along with pluvial and fluvial layers (Bangalore et al., 2016). In Vietnam flood events have been shown to significantly reduce welfare and increase poverty (Arouri et al., 2015; Bui et al., 2014; Thomas et al., 2010).

**8) Drought hazards** are measured by the intensity of drought conditions.  This intensity is expressed by the number of months of long‐term mean discharge which would be needed to overcome the maximum accumulated deficit volume during dry months (Winsemius et al., 2015). Drought events in Vietnam are associated with agricultural production losses, negative welfare impacts and poverty (Arouri et al., 2015; Bui et al., 2014; Thomas et al., 2010).

There are two main limitations of these variables for the purpose of this study. All these variables are time‐ invariant (i.e. have the same value for all the years with household survey data) as they are based on historic risk profiles. On the one hand, it would be preferable to measure actual conditions during the survey years to control for any changes between the years, which is not possible with the available data sets. On the other hand, measuring environmental risks based on past conditions minimizes causality problems, whereby consumption and income can determine current environmental conditions. However, the data cannot address any omitted variables bias, which leads to some endogeneity concerns (as will be discussed in section 5). Moreover, most of these variables are based on global data sets using global models or data, which are not necessarily representative for the specific conditions within the districts and communes in Vietnam. Optimally such variables would be measured based on ground station data, which however is not readily available. Although these are important limitations that require further work, the available data can provide some first insights into the relationships between environmental risks and poverty.

# **3. Environmental risks and poverty across districts**

This section performs a spatial analysis to explore whether the incidence of poverty is higher in districts with high environmental risk levels.

## **3.1 Methods**

National maps are produced that show the extent of environmental risks and poverty at district‐level. First, all environmental risk variables are calculated at district level and all districts are then categorized into three groups with an equal number of districts in each group: high, medium and low risks.<sup>5</sup> Similarly, all districts are classified into high‐medium‐low poverty categories based on the 2010 poverty rate maps produced by Lanjouw et al. (2013). In addition, we calculate the absolute number of poor people in each district, also from Lanjouw et al. (2013) and classify districts as high, medium and low poverty according to the number of poor people. These relative and absolute poverty maps are then overlaid with the environmental risk maps (Figures 1 and A.1). In addition, the poverty rate and number of poor people in each risk category is calculated (Tables 1 and 2).

> 5 For land degradation, due to the large number of districts experiencing no loss (0), the low risk category includes all districts with 0 loss (243 districts), and the rest of the districts are split into the medium and high categories.

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