Voters Response to Natural Disasters Aid: Quasi-Experimental Evidence from Drought Relief Payment in Mexico

We estimate the effect of a government climatic contingency transfer allocated through the recently introduced rainfall indexed insurance on Presidential election returns in Mexico. Using the discontinuity in payment based on rainfall accumulation measured on local weather stations that slightly deviate from a preestablished threshold, we show that voters reward the incumbent presidential party for delivering drought relief compensation. We find that receiving indemnity payments leads to a significant average electoral support for the incumbent party of approximately 7.6 percentage points. Our analysis suggests that the incumbent party is rewarded by disaster aid recipients and punished by non-recipients. This paper provides evidence that voters evaluate government actions and respond to disaster spending contributing to the literature on retrospective voting.