Economics of Early Response and Resilience

Emerging Lessons from Kenya and Ethiopia

Background

The scale and frequency of natural disaster and conflict are putting ever-greater pressure on the humanitarian system.  Not only do these crises result in significant economic losses, but they also require large amounts of humanitarian aid from the international community and the costs of this are rising.

It is widely held that humanitarian action during the early stages of a crisis and investing in the disaster resilience of communities to cope with shocks and stresses is more cost-effective than humanitarian response when a crisis is in full swing.  Anecdotally, we know that early response and investment in resilience can lessen needless suffering and loss of life, and reduce the need for humanitarian aid.  By saving lives as well as livelihoods, communities can also bounce back much more quickly when disaster strikes.

DFID commissioned a study which, using case studies of pastoralists hit by drought in Kenya and Ethiopia, compared the costs of three scenarios.

• Scenario A: Late humanitarian response to drought.
• Scenario B:Early humanitarian response, through commercial destocking of excess livestock and early procurement and transportation of aid supplies.
• Scenario C: Building disaster resilience, through investment in building the ability of communities to cope with drought on their own.

The study estimated the cost of each scenario by examining the impact of a severe drought, equivalent to the 2011 Horn of Africa Crisis, upon food deficits, livestock losses and national-level indicators for drought impact and cost.

Key Findings

• Early response is far more cost-effective than late humanitarian response

  Over a 20 year period, early response in southern Ethiopia, through early procurement and transport of aid supplies and commercial destocking, was shown to save between $1.6 billion and $3.1 billion.  This indicates significant potential to improve value for money on later humanitarian responses.  In Wajir, in Kenya, savings from early response, for the same time period, are estimated at between $250 million and $392 million.
  Early response carries the risk that investment is made without a full-blown crisis developing.  Figures from the study suggest, however, that donors could fund early response twice in Kenya, and seven times in Ethiopia, before the cost is even equivalent to that of a single late response.  The analysis also looked at commercial destocking as a specific early response measure and found that the benefits of destocking far outweighed the costs, with a benefit : cost ratio of 390 : 1 in Kenya and 311 : 1 in Ethiopia.

• Building resilience could represent the best value for money

  The study suggests that while resilience costs more than early response, building resilience offers the best value for money of the three scenarios when its wider development benefits are considered.  Every $1 spent on disaster resilience resulted in benefits, in the form of reduced humanitarian spend, avoided losses and development gains, of $2.8 in Ethiopia and $2.9 in Kenya.
  However, more work is needed on the relative costs and benefits, particularly in the longer-term, of different interventions in different contexts.  An intervention that is effective in one context could be ineffective in another.  This is especially true for expensive interventions such as education and roads, which are essential basic services.