This report describes IDMC’s methodology for estimating the costs of internal displacement. [The report uses ‘financial’ and ‘economic’ costs interchangeably, but largely captures financial costs.] The methodology takes into account only the direct and immediate costs associated with internal displacement including: (a) cost of providing shelters and temporary accommodation, non-food items, WASH services, and camp coordination; (b) loss of incomes due to loss of livelihoods; (c) cost of providing temporary education; (d) cost of providing food assistance; (e) cost of providing emergency health care; and (f) cost of providing security in host areas. Due to lack of data and the complexity of the problem, the methodology does not account for: the longer-term consequences of internal displacement (e.g. future reduction of income; consumption and income tax linked with a displaced child’s inability to access an education); the cost of adapting infrastructure and services to cope with the arrival of large numbers of IDPs in host communities; impacts on host communities; or social and environmental costs. Using publicly available data, the report presents estimates of the cost of displacement crises in eight countries, representing a cross-section of the conditions under which major displacement crises can occur: the Central African Republic, Haiti, Libya, the Philippines, Somalia, South Sudan, Ukraine, and Yemen. Key results include:
- Applying the methodology, the authors estimate the average annual economic impact associated with internal displacement ranges from less than one per cent to 11 per cent of their pre-crisis GDP, mostly depending on the number of IDPs and the severity of the crisis. Unsurprisingly, crises that displace the highest number of people for the longest time result in the highest economic impacts.
- In all countries, the highest financial burdens come from the impacts of internal displacement on livelihoods, housing and health. The costs and losses associated with security and education are generally secondary to these burdens, but are still significant. The authors acknowledge that estimates of the cost of providing education are based on metrics derived from humanitarian requirements, which are notoriously under-funded, and which are likely to underestimate true costs.
- The average economic impact for each affected person [i.e. for the subset of IDPs in need of assistance] is highest in Ukraine ($970 per annum) and Libya ($708 per annum) mainly due to loss of livelihoods, as these two countries have the highest median income. The total impact per affected person for all other countries ranges from $357 per annum for flood-related internal displacement in Somalia to $589 per annum in South Sudan.
- The average economic impact per IDP [i.e. all IDPs including those not requiring assistance] is highest in CAR ($451 per annum) and South Sudan ($399 per annum) and lowest in Ukraine ($230 per annum) and Somalia floods ($174 per annum). The average economic impact per IDP appears to be heavier in poor countries (CAR, Haiti, South Sudan, Somalia) compared to lower-middle (Ukraine) or upper-middle income countries (Libya), possibly because the population was already in a critical situation before the crisis and their capacity to respond to its impacts is very limited.
- The average economic impacts per IDP are estimated at $310 for one year of displacement. Applied to the total number of IDPs recorded across the world at the end of 2017, this would mean the total cost of internal displacement globally would be nearly $13 billion a year.
The authors conclude that while the estimates capture only some of the costs associated with internal displacement, nevertheless these amount to a significant share of each country’s GDP.