Photograph — Tobin Jones/UN

Internal displacement due to social conflicts and climatic crises can be devastating for those directly affected, but it can also be financially and economically devastating for their host countries, governments, and aid providers. According to a recent report by Geneva-based organisation, Internal Displacement Monitoring Centre (IDMC), internal displacement limits the ability of internally displaced persons (IDPs) to contribute to the economy and generate specific needs that must be paid for.

The report which is a first of its kind used publicly available data and methodology to estimate the average annual economic costs of the consequences of internal displacement on health, shelter, education, security and income in eight countries that have recently experienced significant displacement in the context of conflict, disasters, or both. “This report presents our first estimates of the financial impact of major displacement crises in eight countries: the Central African Republic, Haiti, Libya, the Philippines, Somalia, South Sudan, Ukraine and Yemen,” the centre stated.

Although the research conducted reveals only a fraction of the economic impacts of internal displacement, the estimates amount to a noticeable share of the affected countries’ GDP. From $174 in Somalia to $451 in the Central African Republic (CAR), the research reveals the average annual economic impact for each IDP. Multiplying the average cost per IDP in a year across all assessed countries, $310, to the total number of IDPs recorded across the world – 40 million as of the end of 2017 – would amount to about $13 billion.  That is the global financial impact of internal displacement annually.

Though more research is needed to analyse more countries and account for more impacts, this report already shows the economic risks involved with internal displacement and what it means for national development. “We have long understood the devastating impact internal displacement can have on the safety and wellbeing of people affected by conflict, violence, disasters and development projects. But internal displacement also places a heavy burden on the economy, by limiting people’s ability to work and generating specific needs that must be paid for by those affected, their hosts, governments or aid providers,” said Alexandra Bilak, director of IDMC.

Furthermore, the research revealed that of all the countries assessed, economic impacts seem higher in low-income countries than lower-middle or upper-middle income countries. CAR had the highest economic impact for each internally displaced person, amounting to $230 million annually, the equivalent of 11 percent of the country’s pre-crisis GDP yearly, and a cumulative economic impact of $953million from December 2013 to December 2017. The highest financial burdens also come from lost income, support to housing and healthcare. “80 percent of all IDPs (in CAR) are unable to pursue their habitual income-generating activity during displacement,” the report states.

Hopefully, this report will help host countries, governments and aid providers tailor their interventions for greater efficiency, but more importantly, it is to raise awareness on the need to prevent internal displacement by being pro-active. “It’s very good to invest in responses to crises… But the best solution would be to prevent internal displacement altogether. This can be done through, for instance, efficient disaster risk disaster strategies,” author of the report, Christelle Cazabat told Reuters.

Note – These estimates do not account for longer-term consequences of internal displacements, such as the future reduction of income linked to a displaced child’s inability to access school. The eight countries assessed were chosen for their geographic and economic diversity, and availability of data.  

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