In the recent launch of the 2011 Humanitarian Appeal in Geneva, it has been pointed out that the amounts required for humanitarian assistance have increased in the last twelve months and will continue to do so over the next years, after reaching a record 9,7 billion USD in 2009. However, 2010 has also been the year with the lowest percentage of appeal requirements funded since 2005 (despite a record amount of humanitarian aid collected). Why is this happening? Is it just a consequence of the increase of the volume of aid?
In order to comment on this question, we should first remember that there has also been an increase in the prices of crucial commodities, such as fuel and food, which have seen their market value rise over the past decade; they actually tripled before a decline due to the economic crisis. This has happened due to both the supply side (such as low investments in agriculture, a series of droughts and an important devaluation of the dollar, in which many commodities are quoted) and demand side issues (an increase in population and a consequent rise in the demand from fast growing countries, principally in Asia, and an increasing demand for bio-fuels). Even after the decrease of prices following the crisis, their value remains very high compared to those at the beginning of the century, as shown from the graph. Moreover, fuel and food prices are closely linked since the cost of agricultural production rises with increases in the cost of transportation and fertilizers. Such increases are further driven by increases in demand for bio-fuels as crude oil supplies decrease (decreasing available land for agriculture).
What does this mean for aid and humanitarian response? First, since food is the top funded sector and is of vital importance in humanitarian contexts, an increase in the price of this commodity means higher funding requirement to meet the needs of the same population suffering from crises. The World Food Program claims, in fact, that more funds will be needed due to higher food import bills. Moreover, fuel makes it more expensive to deliver aid into regions of the world that are already often difficult to reach because they are landlocked and lack adequate infrastructure. I have tried to study the relationship between commodity prices and the volume of appeals from CAP appeal requirements, (total and food ones) over the past decade.
However this exercise did not produce significant results because the appeals differ year by year. I have therefore considered a sample of appeals for which we have time-series data from 2005 (Central African Republic, Cote d’Ivoire, occupied Palestinian Territory, Somalia, Uganda and West Africa). The total amount has been continuously increasing, also if in 2009 the yearly increase was lower compared to previous ones (from a 25% increase in 2008 to 17% in 2009). Despite this slight improvement (probably due to the lower commodity prices), as stated in the recent launch of the Humanitarian Appeal, things will get worse next year. But as the picture is complex, the issue will require further research.
What solutions are possible to avoid major fluctuations? Many experts suggest a twofold reform, concerning both institutions and markets. It will be necessary to find adequate policies to make aid less expensive. Some institutions are starting to avoid importing food by stimulating and relocating food production in or close to emergency areas; agriculture counts is in fact for just 3,1% of total ODA, and could be helpful to link short and long term strategies regarding food insecurity. Yet it will also be necessary to avoid speculation in price determination and consequently in the availability of necessary goods to the poor and people in need (giving money instead of in-kind donations is also suggested as a better use of resources by many experts and institutions, such as the World Food Programme or Oxfam). Therefore a global effort is required to avoid a continuous increase of requirements, accompanied by a lower share of coverage that will harm who is more vulnerable and in need!