This paper develops an agent-based model of a stylized low income region
in order to study the impact of natural disasters on population displacement, income,
prices, and consumption with a focus on distributions and coping strategies of low
income groups. Key features of the model include the integration of decentralized
markets into a full economy in a spatially explicit way and the analysis of shortrun
adjustment processes. The model is calibrated to a low income region of rural
agrarian Pakistan that faced severe floods in 2010. Dynamic adaptation by agents in
response to falling income includes migrating and running down savings. Despite
these consumption smoothing strategies, some low income groups are vulnerable to
starvation. The paper showcases two hypothetical policy scenarios, a cash and a food
transfer program, and tracks their effects on the welfare of low income groups in the
economy