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Unveiling the cost of internal displacement: 2020 report

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THEMATIC SERIES

The ripple effect: economic impacts of internal displacement

This thematic series focuses on measuring the effects of internal displacement on the economic potential of IDPs, host communities and societies as a whole

In February 2019, IDMC estimated the direct cost of providing every IDP with support for housing, education, health, and security, and their estimated loss of income in eight countries. This report applies the same original methodology to assess the economic impact associated with internal displacement in 2019 for 22 countries.

The countries selected have recently been affected by internal displacement associated with conflict and violence, disasters, or a combination of both. As they are located in different regions and range from low to upper-middle income, they provide a cross section of the conditions under which displacement crises can occur and the financial ramifications associated with them.

EXECUTIVE SUMMARY

Internal displacement can have a destabilising effect on the lives of those forced to flee their homes, often with significant financial repercussions. It can limit the ability of internally displaced people (IDPs) to contribute to the economy and generate specific needs that must be paid for by the IDPs themselves, host communities, government agencies and the humanitarian sector.

Based on an original methodology, IDMC in February 2019 first estimated the direct cost of providing every IDP with support for housing, education, health and security, and their estimated loss of income in eight countries. The economic impact of internal displacement globally in 2017 was estimated at $13 billion, with an average cost and loss of $310 per IDP. In a subsequent study, the cost of internal displacement in sub-Saharan Africa for 2018 was estimated at $4 billion.

This report applies the same methodology to assess the economic impact associated with internal displacement in 2019 for 22 countries (see Box 1). The countries selected have recently been affected by internal displacement associated with conflict and violence, disasters, or a combination of both. As they are located in different regions and range from low to upper-middle income, they provide a cross section of the conditions under which displacement crises can occur and the financial ramifications associated with them.

The estimated cost and loss associated with displacement ranged from $114 per IDP for a year of displacement in Colombia to $869 per IDP in Syria. This variation is a result of a range of factors including differences in the level of need across affected populations and the cost of meeting those needs, as well as IDPs’ estimated loss of income. With about 50.8 million people living in internal displacement as a result of conflict, violence and disasters at the end of 2019, and an estimated average cost and loss of $390 per IDP, this places the total global economic impact in 2019 at $20 billion. These estimates are conservative, partly because of the limited data available and the complexity of the issue. They do not account for the economic impacts associated with longer-term consequences of internal displacement, or the financial impacts on host communities or communities of origin.

Despite only uncovering a fraction of the hidden costs and losses associated with internal displacement, these figures reveal the substantial economic burden it can place on governments, aid providers and society as a whole. In the case of Somalia, for instance, the total economic impact of internal displacement was estimated to be just over $1 billion, which represents about 21 per cent of the country’s GDP in 2018.

Revealing the financial consequences of internal displace- ment can highlight the value of investing in preventative strategies and early interventions to support IDPs more effectively and reduce the negative economic impacts associated with their displacement.