Assessing the Economic Impacts of Internal Displacement: Conceptual Framework

Estimating the economic impact of internal displacement on affected people, countries and regions would help make the case for increased country-led investments in risk reduction and durable solutions. However, a systematic, quantitative estimate of the overall impact of internal displacement on an economy has yet to be made, and doing so requires new concepts and methods. This document proposes a conceptual framework to assess the economic impact of internal displacement comprehensively across dimensions, time, countries and displacement contexts. It notes that internal displacement encompasses a wide range of situations that vary significantly in scale and severity. While there may be positive and negative impacts of internal displacement on an economy, evidence suggests that the overall impact of internal displacement is negative, particularly when it is not well managed. The impacts of internal displacement may be direct or indirect, short term or long term, tangible or intangible, and individual or societal. Internal displacement translates into significant financial costs for individuals, households, communities of origin and destination, the private sector, local and national governments and humanitarian aid agencies and international donors. The proposed conceptual framework adopts a broad approach that includes the cost of humanitarian aid and emergency responses, as well as longer-term consequences on the economic potential of individuals and societies. Previous studies have highlighted seven interrelated dimensions through which internal displacement has a potential impact on an economy, including housing and infrastructure, livelihoods, social and cultural, education, health, security and the environment.IDMC has identified three priority areas for the first phase of this work: (1) to assess the impacts of existing displacement by highlighting both the cost of long-term and protracted displacement and the positive contributions that IDPs make to their host communities and economies; (2) to estimate the cost of new displacement and displacement risk in order to illustrate the financial burden of recurring displacement on national budgets and highlight the additional costs associated with future risk; and (3) to model the different ways in which internal displacement affects an economy and the relationship between those dimensions to better reflect complex realities and inform policy options.