Estimating the Effects of West Sumatra Public Asset Insurance Program on Short-Term Recovery after the September 2009 Earthquake

This paper analyses the effect of the West Sumatra public asset insurance program on short-term economic recovery after the September 2009 West Sumatra Earthquake. We use satellite data on yearly differences in nighttimelight intensity as a proxy for economic activity, to investigate the effect of the earthquake damage on overall luminosity in 2009 and the progress in recovery in the year 2010. Our identification strategy applies a regression discontinuity (RD) approach that exploits the discontinuity in insurance coverage at the provincial border. We find a small, statistically significant and positive effect of the public insurance scheme on the short-term recovery in West Sumatra.