The benefits of early response to drought in Ethiopia

The humanitarian system is under substantial pressure. Over the last decade, humanitarian needs have grown six-fold, and the funding provided to respond to these needs has fallen consistently short of what is required.

Within this context, humanitarian actors are in a constant state of crisis response mode, struggling to respond to multiple events, with funding typically arriving just as a crisis reaches its peak.

Ethiopia is no exception. Response to drought typically arrives late – despite the fact that drought is slow onset and there is ample time to anticipate and act.

During the 2015 drought, only 51% of humanitarian needs had been funded more than three months after the launch of the Ethiopia Humanitarian Requirements Document (HRD).

Early response facilitates early purchase of food and supplies, which can result in substantial savings to donor budgets.

Pre-positioning of lifesaving aid can allow for a faster response and save on transportation costs in an emergency.

Even more so, it can ensure that families receive the support they need before they begin to engage in negative coping strategies with lifetime economic implications, such as selling off assets and pulling children out of school.

As part of its continued efforts to contribute to the international discourse on improved humanitarian financing, the UK Department for International Development (DFID) commissioned a study to look at the economics of early response to the 2015/2016 drought in Ethiopia, the findings of which are summarised here.

The funding gap for food

The scale of the 2015/2016 drought has put immense strain on the systems underpinning both the PSNP and the HRD, including limited port capacity, trucking capacity and warehouse space.

Food aid typically takes between three and five months from funding to distribution. This makes early funding for food critical for protection against pipeline breaks.

Click here to view the full report on lessons from the 2015-2016 drought in Ethiopia.

Unlike most years, in this particular drought, local supplies of this commodity are more expensive than those that are internationally procured. As a result of the shortfall in funding, food has not been arriving in Ethiopia fast enough to meet needs.

This forces households to turn to purchasing local cereals. Therefore, the cost of filling the food gap locally by providing people with cash transfers to purchase what they need is used as a proxy for the cost of late aid.

The financial cost of late food procurement

Under the HRD, $1.1 billion was requested for food aid. As of 31 March, 2016, $500 million had been funded, leaving a funding shortfall of $600 million.

In June 2016, the cost of procuring cereals locally was 21% higher than international procurement earlier in the year.

Cereals comprise 88% of the food basket ($528 million out of the $600m shortfall); substituting local purchase of cereals due to the delay in imported food increases the cost from $528m to $639 million, an additional cost of $111 million, compared to the cost of timely response. This finding is conservative.

The assumption that funds received before April 2016 are ‘early’ is generous, given that calls for emergency assistance were made as early as August 2015 and also considering the substantial lead time between funding and delivery of food.

As of 7 December, 2015, $158.2 million of funding was available for food (Government of Ethiopia, 2016), leaving a food gap of $942 million.

Using the same principles applied above, late procurement resulted in an additional cost of $174m for food under this scenario.

If this same analysis is conducted for a pipeline analysis of the food deficit for caseloads under both the HRD and the PSNP, timely funding for the full food requirement could have avoided additional costs of between $127 million and $271 million when compared with late procurement.

This funding could have provided an additional 1.4 million to 3 million people with a nine-month food ration.

The economic cost of late food procurement

In reality, it is likely that procurement will not happen in full, with evidence already pointing to households suffering from severe shortages of food and other supplies.

A lack of food can, in turn, have lifetime economic consequences for those affected. The existing evidence can be used to make an indicative calculation of the relative magnitude of impact that could result from a lack of response.

This suggests that the economic cost of ‘no response’ could more than double the cost of an early response.

Conclusions

Timely responses to humanitarian crises can result in financial and economic gains, releasing pressure on the overall humanitarian system and freeing up important resources that can be invested in proactive rather than reactive responses.

The saved costs from early procurement would provide the donor system with additional resources to meet humanitarian need.

Early responses can also have important implications for those affected by a drought, by providing assistance before households have had to resort to negative coping strategies.

This can help these same households to shore up for the next crisis, and cope better than they would have otherwise. The combination of decreasing costs and household asset protection can create a virtuous cycle of economic development and poverty reduction.

The Grand Bargain, launched at the 2016 World Humanitarian Summit, specifically calls for new ways of financing humanitarian crises. It refers to flexible funding – including multi-year and unearmarked humanitarian funding – as the ‘lifeblood’ of any humanitarian operation.

The findings from this study fully support this call. It is imperative that funding models shift to respond to the first signs of a crisis. Flexible funding can allow Implementing Partners to pivot funds depending on need and help stimulate a quicker response.

Importantly, mechanisms that trigger early funding based on pre-agreed indicators are critical for overcoming some of the political, institutional and media effects that have held the humanitarian system in a state of crisis response.