Uneven Waters Examining Poverty and Urban and Rural Households’Exposure to Flood Risk in Paraguay Paul ErvinLyliana GayosoEliana Rubiano Matulevich Policy Research Working Paper11215 Abstract Floods are becoming more frequent and severe due to cli-mate change, population growth, and land cover changes.In Paraguay, floods are the most common weather-relatedhazard and disproportionately impact poor and vulnera-ble populations. This study contributes to understandinghousehold-level exposure to flood risk in Paraguay by com-bining geolocated household survey data with novel flood facing depths of flooding nearly four times higher than non-poor households, in smaller, more common flood events.The approach provides valuable insights for targeting floodrisk reduction efforts and highlights the importance ofconsidering socioeconomic vulnerability in disaster riskmanagement. These findings underscore the multidimen-sional nature of vulnerability to flood risk, particularly in Uneven Waters: Examining Poverty and Urban and Rural Households' Paul Ervin,1Lyliana Gayoso,2and Eliana Rubiano Matulevich3 Keywords: poverty, welfare, flood hazard maps, household survey data, ParaguayJEL: I3, Q50, Q54, R2 1.Introduction Understanding flood exposure among those living in poverty is important for development outcomes andpoverty reduction. Globally, the poor are often more exposed to flooding and typically the most vulnerableto flood impacts, as they are unable to afford mitigation measures and any reduction in income orconsumption risks pushing them below subsistence levels (Hallegate et al., 2020). While poverty cancontribute to flood exposure and vulnerability, flooding can also increase poverty through direct loss ofincomeand assets(Rodriguez-Oreggia et al.,2012),long-term indebtedness,and reduced labor Recent research in Paraguay estimates that floods have contributed to an increase in poverty of nearly 2percentage points on average, primarily in urban areas (Janz, Gassmann, & Gayoso de Ervin, 2024). Floodingoccurs more frequently than other natural hazards in Paraguay (EM-DAT, 2024) and has had significantimpacts on the country’s population, displacing a large share of the population and impacting health andwell-being (Nagy et al., 2016). Not surprisingly, urban flooding due to inadequate infrastructure andplanning has emerged as a pressing issue for the country (World Bank, 2023). According to the Paraguay Climate change, coupled with continued population growth and urbanization, is likely to contribute toincreased flood risk in Paraguay in the future. The impacts of climate change in Paraguay are alreadyevident. Changes inEl NiñoandLa Niña, together with anomalies of the Intertropical Convergence Zone(ITCZ), have led to an increasing number of intense rainfall and flooding events, along with heat waves (Cai,et al., 2020; Glantz & Ramirez, 2020). In the last century, the frequency of floods and droughts has increased The existing evidence suggests that poverty is both a driver and a consequence of flood exposure (Ervin etal., 2025). This implies that the poor are not necessarily the most exposed to flood risks. Indeed, while somestudies provide evidence that people living in poverty are often more exposed to flood hazards (Pelling,1997; Akter and Mallick, 2013),4this is not always the case, as other studies report similar exposure ratesbetween poor and non-poor households (del Ninno et al., 2001; Opondo, 2013). On one hand, poor people and other uses; or, the poor may choose to reside in other flood prone areas, due to proximity to theirworkplace (e.g., dockworkers) or schools, among other things (Hallegatte, 2012; Patankar, 2015). Second,land and housing markets, especially in areas with land scarcity, may push poor people to live in riskier,cheaper areas (Daniel V, Florax, & Rietveld, 2009). Third, flood risk in an area may be unknown. For example,in a newly developed area flood risk may be unknown and as the area is affected by flooding and riskbecomes more known, richer households may move away, while poorer households may not have theresources to leave. However, on the other hand richer households may be more exposed to flooding than The empirical evidence on flood exposure and poverty indicates that a key pattern emerges in urban areas,where land scarcity often pushes poor households toward higher risk areas. Studies by Narloch andBangalore (2018) and Winsemius et al. (2018) found that poor urban households face higher flood exposurethan the average urban population, while flood exposure among rural households shows less variation byincome level. This rural-urban distinction may reflect differences in wealth, land availability and thepotential benefits of proximity to water for agricultural production areas (Hallegatte, 2016). In general, thevarious findings on the relationship between flood exposure and poverty in the existing literature are likelypartly driven by the contexts of the various study a