Assessing direct and indirect effect of flood disaster on smallholder agriculture: A Structural Equation Modelling Approach

Flood impact assessment and understanding of the costs of flood disaster is critical for decision making processes towards an integrated flood risk management by the policymakers to effectively reduce flood disaster effects. Virtually, most economic analysis of flood disaster effects focuses too often on direct physical effect, neglecting the wider indirect ones, this paper, therefore aimed at assessing both the direct and indirect effect of 2014/2015 flood disaster on smallholder agriculture in Kelantan. Data were obtained from 385 affected smallholder farmers using multistage sampling technique and analyzed through the use of correlation, factor analyses and structural equation modeling (SEM) using SPSS and AMOS software. The findings showed that flood has a significant direct effect on agriculture which in turn results in wider indirect effects. The study offers valuable implications, first it could help policymakers to facilitate and improve on the flood disaster management practices to lessen/avoid future effects in the study area and finally give an insight to academicians/researchers in applying and/or improving the model while assessing the effect of flood and other natural disasters in future research.