In May of last year, the United Nations issued a stark warning: Economic losses from disasters are "out of control." According to UN Secretary General Ban Ki-Moon, "So far this century, direct losses from disasters are in the range of $2.5 trillion. This is unacceptable when we have the knowledge to reduce the losses and benefit from the gains." In addition to these direct losses, humanitarian response to protect lives and rebuild is required in the aftermath of these events. In 2012 alone, $17.9 billion was spent on international humanitarian aid; the U.S. was the largest donor contributing $3.8 billion.
The devastating floods that have affected the UK this month are a reminder that this issue is certainly not limited to developing countries. The floods could reduce GDP by just over one percent, knocking an estimated $20 billion off the value of the economy. These floods come off the back of cuts in real-term spending on flood defenses, highlighting the false economy of dealing with the crisis after it has hit.
A recent study commissioned by a group including the United Nations, governments, and NGOs revealed that action to prepare for disasters is consistently lacking across nations. This is despite a growing body of evidence that greater investment in preparedness and reduction of risks associated with disasters is far more cost-effective. For example, the UK Department for International Development (DFID) commissioned a study last year that suggested that the international community is wasting billions of dollars every year that could be protected simply by ensuring effective preparedness activities are in place, at very little cost.
Even where the will exists within countries to be better prepared, gaining access to funding for preparedness activities is nigh on impossible. An analysis of 12 low-income countries over a 20-year period revealed that these countries received $5.6 billion of funding for disaster response, compared with less than $10 million each for disaster risk reduction. This is equivalent to $160,000 dedicated to response for every $1 invested in reducing risk.
Along similar lines, despite a widespread understanding that disasters undermine a significant proportion of international development spending, funding for reducing the risk of disasters is a tiny fraction of total development spending. The latest data suggest that funding for disaster risk reduction has amounted cumulatively to $13.5 billion over the past 20 years, equivalent to 0.4 percent of the $3 trillion in overall development commitments worldwide. And yet, a large proportion of this development spending is at risk of being damaged or destroyed by disasters, which will only increase as climate change continues to evolve.
Two communities of practice have long characterized the international aid industry. On the one hand, the development community deals with long-term poverty reduction in order to support development and growth. The other, the humanitarian community, deals with the crises, shocks, and stresses caused by natural and man-made disasters. Emergency preparedness requires activities from both camps. It requires having the more "developmental" activities such as long term policy frameworks for dealing with disasters, having the right fiscal planning in place to enable money to be set aside for use in the event of a disaster, and having the right institutions to respond, such as trained search-and-rescue personnel. It also requires activities we conventionally think of as being more "humanitarian," such as stockpiling food and equipment, and creating evacuation plans, emergency shelters, and contingency plans.
You might think this implies that both "camps" are thinking and acting on preparedness. Unfortunately the opposite is happening -- preparedness falls through the cracks. The financing architecture is largely to blame. Donors funding development consider emergency preparedness to be part of the humanitarian remit; conversely, donors in control of humanitarian money are largely restricted from using funds until after a crisis has occurred. As a result, preparedness funding often comes through as part of humanitarian budgets, which are only released after a crisis has occurred. And even in this situation, funding regularly falls short of need, so whatever humanitarian funding is available rightly focuses on saving lives, not preparing for a future event.
In order for early response to work, agencies need to be able to respond flexibly to conditions as they arise. There are small, isolated examples of donors supporting such flexible approaches. For example, the UK DFID has been developing a new approach to provide predictable multi-year humanitarian funding for countries such as Sudan, Yemen, DRC, and Somalia, to enable partners to invest in the capacity required to meet humanitarian need through greater preparedness. But this is far from the norm.
The reality is simple. In order to be prepared to deal effectively with disasters, preparedness measures need to be put in place before the disaster occurs. In most cases, this is by far the most cost effective approach, with the potential to save billions of taxpayer's dollars, and can reduce the ever increasing burden on the humanitarian system-a burden that stretches it beyond its means and, in some cases, its mandate. It is time for a marked change from post-crisis "business as usual."
Courtenay Cabot Venton is an international development economist.
Katie Peters is a research fellow at the Overseas Development Institute