This study shows that emergency preparedness facilitates a more relevant, timely, effective, and efficient humanitarian response, which in turn improves how affected communities’ needs are met during emergencies. Creating an evidence base for these potential benefits is vital to making the case for investment in humanitarian preparedness. Furthermore, planning with scarce resources requires that decision-makers understand the trade-offs between different opportunities. Building an optimal preparedness portfolio therefore requires robust investment logic. Indeed, emergency preparedness expenditure should be thought of as an investment because it occurs in a context of uncertainty and yields a return, either financial or outcomerelated. This study, like others carried out before it, helps qualify and quantify the benefits of preparedness.
The ROI Methodology used in this study is a tool for humanitarian practitioners to make the case for their investments in a way that helps decision-makers understand the trade-offs involved.
This framework was first developed by BCG for the UN in 2015 and refined by PwC for a broader audience of UN agencies in 2017. It relies on carefully analysing and comparing how a humanitarian response in different risk scenarios would occur with and without the investment having been made. This methodology enables the development of business cases. Indicators derived from this comparison are defined as ROI indicators.
Using this methodology, a joint Learn More and PwC team appraised 11 capacity development investments collectively valued at £3,874,424 in Ethiopia and the Philippines, funded through the DEPP programme. For 6 of these investments, it was possible to compute expectations of financial returns, with a Financial ROI ratio ranging between 0 and 5.88, averaging £2.84 per £1 invested. This portfolio is forecast to generate £3,358,508 in savings over ten years, with an average payback period of 4.4 years. These results are in line with the previous BCG and PwC studies which mainly covered logistics investments, which tend to be more easily appraised as there is a more direct link between investments and desired effects. It also opens avenues for further research into the financial savings obtainable through capacity development.
These investments are also expected to yield improvements in the surrounding humanitarian ecosystem’s capacity to respond, a finding captured by the Capacity ROI forecasts developed as an addition to the ROI Methodology. Specifically, investments that empower local communities as humanitarian actors, those that fill humanitarian skills gaps and those that enable faster and more appropriate responses through enhanced data gathering seem to offer the most potential, particularly at the individual capacity level. Also, this investment portfolio shows significant potential for time savings. Once an outlier is excluded, 10 of these investments are estimated to save 35.4 days in lead times on average per emergency, a figure that could result in many lives being saved. While this number is higher than averages in the BCG and PwC studies, it is similar to that seen in the past for investments that are similar in scope. This is an indication that capacity development investments, though at times hard to appraise, are among the most promising in terms of humanitarian results.