The Economics of Early Response and Disaster Resilience: Lessons from Kenya and Ethiopia

In 2010 natural disasters affected more than 217 million people, killed more than 297,000 people and caused $123.9 billion in economic damages. The types, dimensions, and dynamics of humanitarian crises are further increasing, in some cases exponentially. The costs of humanitarian crises are equally growing – not only do disasters and complex emergencies result in significant economic losses, but they also require mobilization of large amounts of humanitarian aid from the international community. According to a recent study on funding streams for emergency response, aid from governments reached US$12.4 billion in 2010, the highest figure on record.
There is growing consensus that greater investment needs to be made in preparedness to reduce the impacts of crises, and an even greater imperative for further work to build the resilience of communities to be able to cope with these events themselves. And yet, despite a rhetoric that has called for reform for the past decade, only 4.2% of total humanitarian aid in 2009 was for disaster prevention and preparedness. For every $100 spent on the top twenty humanitarian recipients over the past five years only 62 cents are spent on preparedness.
This study uses Kenya and Ethiopia as case studies, comparing the relative costs of late humanitarian response, early response, and building resilience to disasters. The purpose of this work is to provide the first step towards: (I) A solid evidence base on the cost effectiveness of building resilience to disasters as compared with the cost of relief and early response; (II) Identify the types of interventions that can provide the highest ‘Value for Money’; and (III) Incentivise donors, partner governments, multilaterals and implementing agencies to invest in and work more on resilience to disasters.