ARTICLES https://doi.org/10.1038/s41893-017-0002-z © 2018 Macmillan Publishers Limited, part of Springer Nature. All rights reserved. 1 Earth Observatory of Singapore, Nanyang Technological University, Singapore, Singapore. 2 Institute for Environmental Decisions, Department of Environmental Systems Science, ETH Zürich, Zürich, Switzerland. 3 International Centre for Aceh and Indian Ocean Studies, Banda Aceh, Indonesia. 4 Department of Statistics, Syiah Kuala University, Banda Aceh, Indonesia. *e-mail: jmccaughey@ntu.edu.sg; jmccaughey@usys.ethz.ch B eyond the immediate destruction and loss of life, disasters can influence long-term social and economic development 1–5 , with the well-being of the poor affected most severely 6 . The inter- national disaster-risk-reduction community has long argued that reducing societal vulnerability to hazards is a key component of sustainable development 7 , a view repeatedly endorsed by United Nations member states in the Hyogo and Sendai Frameworks 8 . In post-disaster contexts, the widely adopted ‘build-back-better’ approach promotes sustainable development through integrating a wide range of vulnerability reduction measures into reconstruction and rehabilitation efforts 8 . However, measures intended to reduce people’s vulnerability to natural hazards may entail difficult trade-offs against other fac- tors that influence people’s vulnerabilities to a wider set of shocks. Such trade-offs are particularly salient in the decision of where to rebuild after a disaster. Although rebuilding in areas less exposed to hazards reduces vulnerability to those hazards, mass relocation projects often have negative social impacts on people’s livelihoods, land rights and community cohesion 9–13 . Given this difficult trade- off, the humanitarian sector has come to favour rebuilding in-place in order to avoid the social disruptions of mass relocation 14,15 , while trying to reduce vulnerability to natural hazards through other means. In addition, political, economic and logistical practicalities tend to make rebuilding in-place the more expedient option. Yet while mass relocation can be problematic, it is not clear that a general policy to rebuild in-place is always consistent with the preferences of people affected by disasters. Studies have shown both that affected people tend to return after disasters 16–19 and that some people prefer relocation 20–23 . Differing preferences may be expected, as people have differing experiences, priorities, livelihoods and attachments to place and community 16,17,24 . Especially after a disas- ter or provision of new information about hazards, housing markets show price discounts for properties closer to earthquake faults 25–28 and on floodplains 29,30 , indicating some preference to live in areas less exposed to hazards. This in turn can lead to socio-economic segregation. Following Hurricane Andrew in the United States, middle-income households tended to move to less exposed areas whereas lower-income households moved into more exposed areas because of reduced property prices 31 . Especially in developing countries, locations that are exposed to frequent disasters tend to be inhabited by lower-income households 32,33 (for an exception to this, see Supplementary Note 1). Such socio-economic sorting is a major social driver of vulnerability 34,35 , as lower-income households that are least able to cope with shocks become disproportionately exposed to natural hazards 36 . Thus, it is not clear where it is best to rebuild, who should decide, nor how these decisions influence societal vulnerability in the lon- ger term. To shed more light on this, we examine long-term out- comes of the reconstruction of Banda Aceh, Indonesia, following the 2004 tsunami. Unlike Hurricane Katrina, after which lower- income households faced substantial barriers to return 37 , the tsu- nami on 26 December 2004, which destroyed roughly half of the city of Banda Aceh 38 , provides an opportunity to observe the long- term impacts of a humanitarian policy to rebuild predominantly in- place in coastal areas that were affected by the disaster and remain exposed to coastal hazards in the future (Supplementary Note 2). Tsunami risk was largely unknown to the population of Banda Aceh before the 2004 tsunami (Supplementary Note 3), therefore this case provides important insights for post-disaster reconstruction efforts in situations in which a disaster generates new local knowledge of a hazard. Such situations are made more likely as growing coastal populations face rising sea levels and the potential for more intense storms 39 . If sustainable development is in part contingent upon reducing disaster risk, then it is critical to know how post-disaster resettlement policies endorsed by the international humanitarian sector influence societal vulnerability. Across Aceh province, the 2004 tsunami caused an estimated 160,000 casualties 40 and led to an international reconstruction effort costing around US$6.7 billion 41 . Initial plans by the Government of Indonesia called for housing aid beneficiaries to be offered the choice to return to their previous place of residence or to relocate farther from the coast, according to their wishes 42 . This was not implemented 43 . Instead, facing intense pressure to rebuild quickly and difficulties in acquiring land for relocation settlements, aid Socio-economic consequences of post-disaster reconstruction in hazard-exposed areas Jamie W. McCaughey  1,2 *, Patrick Daly 1 , Ibnu Mundir 3 , Saiful Mahdi 4 and Anthony Patt 2 With coastal populations growing and sea levels rising, reconstruction decisions after coastal disasters are increasingly con- sequential determinants of future societal vulnerability and thus the sustainability of development. The humanitarian sector tends to favour rebuilding in-place to avoid the social disruptions of mass relocation, yet evidence on what affected people want is mixed. Using the case of post-tsunami Banda Aceh, Indonesia, we investigate whether a policy to rebuild in-place in the disaster-affected area suits an urban population that was previously unaware of the hazard. We show that following the tsunami, a substantial proportion of the population prefers to live farther from the coast. This has caused a new price premium for inland properties and socio-economic sorting of poorer households into coastal areas. These findings show that offering reconstruction aid predominantly within a hazard-exposed area can inadvertently transfer disaster risk to the poor. NATURE SUSTAINABILITY | VOL 1 | JANUARY 2018 | 38–43 | www.nature.com/natsustain 38