The Economics of Resilience to Drought in Kenya, Ethiopia and Somalia

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Client: USAID
Year: 2018
Countries: Ethiopia, Kenya, Somalia

Humanitarian aid is critical for saving lives, alleviating suffering, and maintaining human dignity. However, aid often arrives late, and there is increasing recognition that this type of response is costly and unsustainable. Responding earlier saves lives, livelihoods and money. Investing in people’s resilience – their ability to manage shocks and stresses without compromising their future well-being – is also critical for reducing these humanitarian costs.

The study finds that donors could save 30% on humanitarian aid spending through an earlier and more proactive response; this is equivalent to savings of US$1.6 billion when applied to U.S. Government spending over the last 15 years in these three countries alone. A more proactive response that can help to protect people’s income and assets is even more cost effective and can help households to manage the effects of shocks. When these benefits are incorporated, the overall savings increase to US$4.2 billion. Put another way, every US$1 invested in building people’s resilience will result in up to US$3 in reduced humanitarian aid and avoided losses.