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Summary Internal conflicts and the forced displacement often caused by such conflicts impose a heavy burden on the civilian population and greatly damage a community's overall welfare. The present study employs a household-level survey administered to 2,322 Colombian displaced households to estimate changes in household welfare after displacement and to assess aggregate consumption levels in destination sites. We also assess whether households are able to smooth consumption, and we analyze the strategies they are compelled to adopt in order to cope. Our results indicate that victims of civil conflict face difficulties in generating income, are unable to rely on usual risk-sharing mechanisms, and are forced to draw upon costly coping strategies in order to smooth consumption. The vulnerability of displaced households, and the possibility of falling into poverty traps, highlight the need to design and implement specific policies for victims of internal conflict in order to cope with the displacement shock.