Rigorous evidence of the cost-effectiveness of investments in disaster preparedness is limited. However, overall the available data points to disaster preparedness leading to clear reductions in both humanitarian costs and losses due to crises (lost lives, assets, livelihoods). While there is general consensus on the importance of preparedness, significant challenges mean it still accounts for a very small proportion of humanitarian aid. There is a need for more research on the impact of disaster preparedness.
Preparedness means putting in place mechanisms which will allow national authorities and relief organisations to be aware of risks and deploy staff and resources quickly once a crisis strikes. By
improving the speed and quality of assistance provided, preparedness can save lives and reduce suffering, and increase the value for money of relief action (increasing efficiency and decreasing
costs). There is an increasing focus on disaster preparedness to improve the effectiveness and efficiency of disaster response and post-response efforts: its importance was underscored at the 2016 World Humanitarian Summit and provisions for preparedness are included in key international agreements and commitments. Despite the general consensus on the importance of disaster preparedness, the majority of humanitarian aid continues to be directed towards humanitarian response efforts: the proportion allocated to disaster prevention and preparedness makes up over 5% of total disaster spending since 2011 (Goldschmidt & Kumar, 2017: 4).
Disaster preparedness entails a wide range of activities. Financing falls broadly into three areas: preparing funds for an early response; financing activities ahead of a disaster (e.g. prepositioning supplies and training field staff); and protecting the most vulnerable. As well as financing preparedness, it is important to have administrative preparedness through, for example, donors streamlining their own administrative procedures, emergency contingency partnerships, and incorporating flexibility into development programming. One of the main challenges for preparedness is the risk that no emergency materialises, leaving donors with the impression that public money was not spent efficiently. Related to this is the limited visibility that comes with successful prevention and preparedness, which could also undermine incentives. A further challenge highlighted in the literature is the lack of evidence about the impact of disaster preparedness.
This review details the evidence from a number of studies of disaster preparedness impact, focusing on cost (and time) effectiveness. The literature reviewed was a mixture of academic papers and development agency reports. Key findings are as follows:
- A study examining the economic case for investment in early response and resilience-building in disaster-prone regions of Kenya and Ethiopia concluded that early response was far more cost-effective than late humanitarian response (Fitzgibbon, 2013). Two strategies were identified as particularly effective in reducing aid costs: early destocking (of animals) and buying food beforehand. Such measures drastically reduced costs.
- A cost-benefit analysis of emergency preparedness in relation to drought and flood hazards in Niger (Kellet & Peters, 2014) found that the benefits of investing in preparedness far outweighed the costs. Estimated benefit-to-cost ratios (BCR) ranged (depending on different scenarios) from US$ 3.25 for every US$ 1 spent, to US$ 5.31 (Kellet & Peters, 2014: 81-82). While the analysis provided a clear financial imperative for greater investment in preparedness, the authors stress that this has to be well-designed – otherwise, it could fail and end up more expensive than ‘business as usual’.
- A 2015 study by the Boston Consulting Group quantified the cost and time benefits of a large and diversified investment ‘portfolio’ of emergency preparedness interventions undertaken by UNICEF and WFP in 2014 (BCG, 2015). It found that all the emergency preparedness investments examined saved significant time and/or costs in the event of an emergency: 75% demonstrated cost savings, with a net saving of $6.4 million, 93% saved time, and 64% saved both costs and time. Among the interventions with the highest return on investment were pre-positioning of emergency supplies, large infrastructure projects, and training.
- A 2016 report (Venton, 2016) gives the findings of a Value for Money (VfM) assessment of US$ 39.8 million DFID contingency funding that was provided early in the 2015/2016
Ethiopia drought crisis. Timely procurement with DFID funding was estimated to have avoided an additional US$ 6.3-7.4 million that would have been incurred by later procurement, an overall saving of approximately 18%.
- A 2017 report (Venton & Sida, 2017) presents interim findings from a study on the value for money (VfM) of DFID multi-year humanitarian funding (MYHF) and contingency funding. The greatest value savings (18-29% less than costs of buying in an emergency) were identified in Ethiopia through smarter WFP procurement. However, overall the study found there was a lot less evidence on anticipated value savings than was expected: this could be due to challenges in collecting data.
- A study examining the relationship between disaster preparation and preparedness (DPP) and the cost of humanitarian disaster response looked at data from 2002 to 2014 of aid received by 156 OECD countries (Goldschmidt & Kumar, 2017). The analysis found no support that investment in disaster preparedness reduces the cost of disaster response, the number of people affected, or the number of deaths resulting from natural disasters. However, the authors stressed that this should not imply a rejection of disaster preparedness, but rather promote understanding of why investments weren’t having an impact and how to improve upon them.
- A 2018 report (DEPP, 2018) gives the findings of a study of the return on investment (ROI) of DFID’s Disaster and Emergency Preparedness Programme (DEPP)’s capacity development investments in Ethiopia and the Philippines. The investments yielded positive returns: on average, for each £1 spent, there was a saving of £2.84 (though financial ROI took an average of 4.4 years to materialise); an average of 35.4 days response time was saved, and there was significant capacity ROI. The report concludes that preparedness investments are effective and likely to provide high levels of return if localised, and preparedness benefits greatly from capacity development investments that support coordination. However, these need to be long-term.
Overall, this review found that there was evidence for the cost-effectiveness of disaster preparedness, pre-financing and early action, but there remains considerable potential to increase savings. The literature points to the need for greater research into the impact of different disaster preparedness investments – as well as the greater allocation of resources for preparedness.