This paper argues that a new approach is needed for risk and poverty reduction. Major external risks, such as climate change and food price volatility, are increasing faster than attempts to reduce them. Many risks are dumped on poor people, and women face an overwhelming burden. A new focus on building resilience offers real promise to allow the poorest women and men to thrive despite shocks, stresses, and uncertainty – but only if risk is more equally shared globally and across societies. This will require a major shift in development work, which for too long has avoided dealing with risk. More fundamentally, it will require challenging the inequality that exposes poor people to far more risk than the rich.
Key findings:
- The inequality of risk: None of the consequences of these shocks and stresses are equal. Poor people and poor countries suffer immeasurably more than others. In relative terms, the financial impact of disasters is far higher in developing countries. For example, South Asia suffers flood losses that are 15 times greater, as a percentage of GDP, than OECD countries. Those who are hit hardest are always the poorest, because they do not have access to welfare or social protection schemes, or insurance to help them withstand an emergency. Nor do they have the political voice to demand that their governments, private companies, or the international community do anything about this.
- Risk is dumped on the poor: Extreme inequality of wealth and power is driving national and international policies that shelter the rich from risk, and pass it down to the poor and powerless. Power and wealth allow some people, corporations, and governments to mitigate the risks they face while directly or indirectly dumping those risks on people with far less capacity to cope.
- A new approach to poverty and risk reduction: Recent crises – such as the global food price hikes of 2008, Pakistan’s floods in 2010 and 2011, and the recurring droughts of the past few years in the Horn of Africa and the Sahel region of West Africa – have been a wake-up call. It is clear now that the response from both governments and the aid sector to increasing risk and structural inequalities is failing the most vulnerable.
- Real resilience: Women and men should not just be able to cope with crises, but to realise their rights so that they have hope for the future, have choices about how to live their lives, and can adapt to change. The ambition must not just be to help people survive one shock after another, but to help them thrive despite shocks, stresses, and uncertainty.
- National responsibilities: States have the legal and political responsibility to reduce the risks faced by poor people, and ensure that they are borne more evenly across society. That includes setting up and funding truly effective systems that tackle underlying drivers of risk and vulnerabilty, and putting in place systems to prepare for and respond to disasters; providing livelihood options so that people can earn a living wage; ensuring equal access to services and to politicial participation in society, and sharing risk through social insurance.
- International dimension: Building resilience requires a fundamental shift in development thinking in order to put risk and inequality at the centre. The proportion of development work taking place in risky contexts must increase. International donors and NGOs must give better support to help countries affected by disasters and conflicts, including working more meaningfully through local civil society, and give greater priority to reducing both.
Recommendations:
National governments must provide leadership on building resilience and reducing inequality: Governments have the responsibility and ability to do this at scale. Building resilience and reducing inequalities need to become national priorities and be embedded in national development plans. But the international community must provide a broad range of support – and take a stronger role in countries affected by conflict.
Resilience-building work must address inequality, power, and rights: International and national elites use their power in markets, governments, and institutions to reduce their own exposure to risk. This is dumped on the poor, either directly or through unequal institutions. The structural causes of gender and income inequality that entrench vulnerability must be addressed. Ways to do so include:
- Sharing risk across societies, through social insurance and other actions targeting disadvantaged groups who require greater support and services simply to give them equal opportunities;
- Building pro-poor institutions at all levels which represent, or are responsive to, the needs and capacities of the most vulnerable;
- Enabling women and men to assert their rights and hold power holders to account through participation in decision-making at all levels;
- Providing free essential basic services for health and education, and social protection;
- Finding resources to fund this – through progressive tax regimes and tackling corruption.
Development work must internalise risk: Identifying, analysing, and managing risk must be a fundamental aspect of development. Shocks can push people abruptly into poverty and keep them there. Preventing the downward slide into crisis and poverty is a cost-effective approach.
- National governments need to integrate risk reduction across national development plans, departments and ministries.
- International agencies should directly tackle risk for poor people in their programmes, rather than treating shocks and stresses as external factors.
- Geographical priorities need to shift so that the proportion of development work in risky contexts increases.
International frameworks must support risk reduction through:
- All governments ensuring that risk and resilience are reflected in the post-2015 development framework, including a new goal on risk, as well as a strengthened Hyogo Framework for Action;
- Developed countries urgently cutting their emissions to keep global temperature increases to below 2°C. Developed countries also need to ensure that at least half of the $100bn in climate finance (per year by 2020) committed in Copenhagen is spent on adaptation;
- Donors providing finance for the proposed Global Fund for Social Protection.
