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Investing in people or building more stuff: which is better for reducing disaster risks?

December 12, 2011
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This is a guest post from Chris Anderson, Oxfam’s global adviser on disaster risk reduction Chris Anderson

While the global humanitarian response system is more effective and sophisticated than ever before, in its current form it’s being outstripped by the pace of increasing risks.

The answer is Disaster Risk Reduction (DRR), which makes great financial sense if done well. But what does ‘well’ mean and why does risk reduction receive so little investment. According to the Global Humanitarian Assistance report 2011, for every US$100 spent on official humanitarian assistance in the World’s top 20 recipients, only 75 cents – or 0.75% – goes on disaster preparedness and prevention.

Most visible among risk reduction measures are the large-scale technological schemes to control the damage of natural phenomena, which are undoubtedly necessary. The US$3.15 billion that China spent on flood control between 1960 and 2000 is estimated to have averted losses of about US$12 billion – a ratio of roughly 1 to 4.  The Rio de Janeiro flood reconstruction and prevention project in Brazil yielded an internal rate of return exceeding 50% and a mangrove-planting project in Vietnam (see pic) aimed at protecting coastal populations from typhoons and storms yielded an estimated benefit/cost ratio of 52 over the period 1994 to 2001.

Less obvious perhaps but no less wise is the investment that enables people themselves to become more resilient to the shocks and stresses they face, long after the concrete mixers or aid workers have gone home.

mangrove planting in VietnamHere, cost-benefit analysis (CBA) is trickier than for big infrastructure projects, but developing the resilience and ‘agency’ of individuals and their communities often produces far higher and longer lasting benefits and should be given equal if not higher value. This is particularly the case for people who have little or weak government to support them and whose livelihoods are insecure.

With failed embankments in Pakistan and Bangladesh and inadequate sea defences in New Orleans, we have dramatic evidence that costly hardware schemes decided upon by primarily economic and technological principles not only can fail spectacularly, but worse can increase risk by lulling people into a false sense of security, or by benefitting one group to the detriment of another.

A study by Courtenay Cabot-Venton, commissioned by Oxfam America and Tear Fund, analysed a selection of CBA studies and found that investing in engagement and ‘soft’ resilience measures with communities over the longer- term can reap significant benefits. Whereas much development programming typically runs for one to three years, the analysis of a British Red Cross project in Nepal shows that returns can often be doubled if a small amount of support, such as refresher training, or maintenance on physical works, is provided over a longer term period of 10-15 years.

The study warns against over-emphasizing immediate economic rates of return in cost benefit thinking. The opinion of people on the ground on whether hard or soft resilience-building interventions have more value to them varies hugely over time. If asked soon after a new physical asset has been provided, then people tend to value it highly. But wait until more time has passed, and the asset has perhaps fallen into disuse, and people value less tangible investments to build their own capacity far more. It’s logical then that when physical hardware interventions are developed along with the end user, and conducted in a transparent and accessible manner, the impact and sustainability improves greatly.

Interventions that bring wider development gains and enable people to adapt to unpredictable risk and changes are generally going to be more cost effective and more sensible in relation to uncertainties such as climate change. Supporting ‘no-regrets options’ that reduce people’s vulnerability more generally – such as the conservation of a natural wetland that sustains nutrition levels of local populations through fish protein, provides them with water in times of drought, helps with flood control, as well as offering income generating opportunities – makes sense in the face of the range of unpredictable risks that many face. These need to be given far more priority in planning and investment alongside physical schemes to control the impact of predicted events.

4 comments

  1. Investing in DRR work, especially facilitating local communities to build their capacity around risk reduction always pays back. In the floods of 2010 in Pakistan, we observed that the communities involved in DRR work over the past years were not only well prepared, less affected but they were also extending helping hand to others. It is factually correct that investing in capacity building is long term investment with long term consequences.

    The other dimension of humanitarian crises is that responding to crises has become now a full business involving huge sums of monies in short period of time with little or no accountability toward local civil society, national governments and the beneficiaries (though there are some initiatives but things are much worst in humanitarian sector than actually accepted/realised). Large number of professional organisations, consultants, suppliers and service providers are involved in the response work. This in itself has made it difficult to speak about longer term perspective, create space to invest and make available resources for the longer term DRR work.

  2. “Less obvious perhaps but no less wise is the investment that enables people themselves to become more resilient to the shocks and stresses they face, long after the concrete mixers or aid workers have gone home.” is the line.

    Less obvious-ness is the reason that neither the governments nor the donors are willing to invest in DRR.

    A World Bank assessment in the recent months says that an initial investment of $ 27 million in DRR in Pakistan can potentially save billions in losses due to disasters. Had there been proper and timely repair of the embankments along the water courses, there would have been much less losses last year.

    I was happy to see this year some voices emphasizing the need of dealing with the emergency on its own and without any external aid. The Disaster Management Authority did not allow the international ngos to start their operations untill one month after rains had displaced millions in the Sindh province. That approach wasn’t liked by many in the country for the Authority itself had done little to assuage the problems of the displaced but was stopping others who were willing and had the means available.

    I can understand government’s inability to invest in DRR as they are strained for resources and when the whole of the country is being run on a day-to-day basis, you can’t expect an investment in an abstraction like DRR.

    BUT what stops the international INGOs from doing that who pour-in millions immediately after? Some might say: it’s state’s responsibility. If we go by that argument then state remains responsible for any and every eventuality. International actors shouldn’t be stepping in then.

  3. @tariq: Your second sentence identifies the issue that is preventing the INGOs from working as suggested in your final question. INGOs spend money on things that governments or donors consider worthwhile; they can incrementally change donors’ opinions, rarely, which a study like the one Oxfam commissioned may contribute to.

    So long as DRR is not obvious enough to get donors to value it, INGOs will be constrained from investing in it to any meaningful degree. Hence it’s great to see some evidence-based advocacy by INGOs around changing donor minds on this issue!

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