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In Focus: Costs of Conflict |
20 July 2007 |
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A recent report by the U.K. House of Commons International Development Committee estimates that the cost of one new conflict -- over $50 billion according to Paul Collier -- almost equals the total value of global development aid in a year.* Another study finds that for every £1 ($1.84) spent on conflict prevention, the international community could save on average £4 ($7.58) on expenditures in peacekeeping missions, humanitarian assistance and nationbuilding.** This special issue of Human Security Research focuses on the direct and indirect costs associated with armed conflict and terrorism, and on the cost-effectiveness of conflict prevention. |
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What's New in Human Security Research : |
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CONFLICT PREVENTION: Spending to Save? The Cost-Effectiveness of Conflict Prevention
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DEVELOPMENT AND SECURITY: Peacebuilding and Post–conflict Reconstruction
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POVERTY: On the Links between Violent Conflict and Chronic Poverty
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PHILIPPINES: The Mindanao Conflict in the Philippines
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TERRORISM: The Costs of Terrorism and the Costs of Countering Terrorism
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COSTS OF CONFLICT: The Costs of Armed Conflict
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ARMED CONFLICT: Measuring the Economic Costs of Internal Armed Conflict – Empirical Estimates
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TERRORISM: The Economic Consequences of Terror: A Brief Survey
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ARMED CONFLICT: Measuring the Costs of Conflict
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SPAIN: The Economic Costs of Conflict: A Case Study of the Basque Country
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CONFLICT PREVENTION : The Costs of Conflict: Prevention and Cure in the Global Arena
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DEVELOPMENT AND SECURITY: On the Economic Consequences of Civil War
CONFLICT PREVENTION
Spending to Save? The Cost-Effectiveness of Conflict Prevention
Defence & Peace Economics* (Feb. 2007)
While the general argument that it is easier and more cost-effective to prevent conflicts before the outbreak of violence has considerable attraction, a rigorous approach to estimating the cost and benefits of this policy is still lacking. The objective of this study is to contribute to the development of such an approach. The project involves six case studies, three retrospective (the Western Balkans, Afghanistan, and Rwanda) and three prospective (Afghanistan, Uzbekistan and southern Sudan). Because conflict prevention involves upfront spending commitments, in return for uncertain future benefits, it tends to be characterised by chronic underinvestment. Yet, even on conservative assumptions, investments in conflict prevention can be highly cost-effective for the international community. If benefits to those directly affected by conflict, together with neighbouring countries, are also included, the 'Spending to Save' case for investing in conflict prevention appears very strong. Some of the most costly foregone opportunities for conflict prevention took place in the immediate aftermath of the end of the Cold War.
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DEVELOPMENT AND SECURITY
Conflict and Development: Peacebuilding and Post–conflict Reconstruction
Government of the United Kingdom // U.K. House of Commons International Development Committee (Oct. 2006)
Violent conflict has killed and displaced more people in Africa than in any other continent in recent decades according to the Commission for Africa. This severely challenges the achievement of the Millennium Development Goals in these countries. Conflicts are also costly. It is estimated that the cost of each conflict almost equals the value of annual development aid world wide. New aid commitments made in 2005 could be cancelled out by an increase in conflict and insecurity in the developing countries. Development and security are intimately related — one cannot be achieved without the other. DFID's approach must be guided by this. While the link between conflict and development is a relatively new field, the Government must prioritise it in order to improve development outcomes among the poorest. Preventing and ending conflicts will do more to create a climate for poverty reduction than any amount of costly aid programmes.
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POVERTY
On the Links between Violent Conflict and Chronic Poverty: How Much Do We Really Know?
Households in Conflict Network (Jul. 2006)
The objective of this paper is to assess the usefulness of this emerging body of work in advancing current understanding of the relationship between violent conflict and chronic poverty. The paper discusses the state-of-the-art of recent empirical research on the transmission mechanisms from violent conflict through to chronic poverty, as well as the impact of chronic poverty on conflict, and outlines the ambitious research agenda still left to be addressed by researchers in this field. The paper is organised as follows. Section 2 discusses some key concepts and defines the overall scope of the paper. The two subsequent sections provide detailed evidence-based discussion of important transmission mechanisms from violent conflict to chronic poverty (section 3) and from chronic poverty to violent conflict (section 4). Section 5 summarises the state-of-the-art, identifies gaps in the existing literature on violent conflict and chronic poverty and proposes ways forward. The paper focuses on individual, household and group interactions leading to and resulting from violent conflict that will impact on individual and household forms of poverty, exclusion and deprivation.
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PHILIPPINES
The Mindanao Conflict in the Philippines
World Bank (Feb. 2005)
This paper briefly reviews the historical roots and the current status of the conflict and peace negotiations in Mindanao. By far the heaviest costs of the conflict to the Bangsamoro people and the Lumads, to Mindanao, and to the Philippines as a whole have been qualitative and dynamic. The paper provides a quantitative assessment of the direct economic costs of conflict estimated in traditional comparative statics terms as a base on which to add the more dynamic and less quantifiable costs. The paper finds that the direct costs of the conflict have been substantial but only at the local level, with a comparatively small impact on the rest of Mindanao and the country as a whole. While bearing in mind the severe methodological limitations, the paper estimates the direct output loss from the conflict during 1970-2001 in the range of $2-3 billion, which is low compared to estimates for other civil conflicts. The costs are much higher, although difficult to quantify, when the authors add human and social costs.
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TERRORISM
The Costs of Terrorism and the Costs of Countering Terrorism
New School University (Mar. 2005)
This paper reviews evidence on the economic costs imposed on target populations by acts of terrorism, and the costs that are borne by efforts to combat terrorism. The costs from terrorist activities have been studied for New York, Spain, Israel and other locations. Countering terrorism involves out-of-pocket and opportunity costs, cost associated with financing methods, and costs associated with changes in the behavior of market participants. Less well studies are the costs of misplaced policies, including the creation of unwieldy bureaucratic structures, the use of threat assessments to distort political outcomes, and the failure to utilize relevant conceptual and empirical tools in the formulation of policy responses. Terrorism imposes substantial economic costs, but there are also significant costs associated with policies to combat terrorism. A society is better off if the threat of terrorism can be reduced, or even eliminated, just as it is better off if the threat of crime can be reduced or eliminated. There are some economic roots of terrorism, but these have more to do with the incentives and constraints that individuals and organizations face than with any specific set of easily quantifiable factors that push people toward involvement in terrorist organizations. This suggests that policy responses to terrorism need to be multi-faceted and flexible.
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COSTS OF CONFLICT
The Costs of Armed Conflict
Stockholm International Peace Research Institute//Project on Military Expenditure and Arms Production (Oct. 2004)
Armed conflicts impose enormous costs of many different types on individuals, societies and states. First are the direct costs of warfare, funded by military expenditure. Second are the costs of the consequences of warfare during the conflict period—loss of life, injury, human suffering, destruction of infrastructure and economic and social disruptions. Third are the costs after the conflict has ended. This paper describes and analyses the cost components of armed conflict and war and provides, to the extent possible, an order of magnitude for each. This task falls in the broader context of the final objective of the work of the Task Force’s Secretariat, which is to determine the benefits to the international community of providing peace and security–related international public goods—or the costs of underproviding such international public goods. The external costs of armed conflicts can be seen as one estimate of the costs of underprovision. The hypothesis is that it is more cost-effective for external actors at the regional and global levels to engage in policies to reduce the risk of conflict than to let conflicts break out. However no cost-benefit analyses are available to inform such decisions. Despite the enormous conceptual, methodological and empirical difficulties of producing such a cost-benefit analysis, doing so is an important task, and any input that can be provided as a basis for decisions is a contribution to accomplishing it.
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ARMED CONFLICT
Measuring the Economic Costs of Internal Armed Conflict – A Review of Empirical Estimates
Department of Peace and Conflict Research//Uppsala University (June 2004)
Most people are well aware of the huge costs for society and individuals of war. There are also many that believe the costs of prevention to be substantially smaller than the costs of armed conflict. This paper reviews empirical studies of the economic costs of internal armed conflicts. There are many different sorts of costs associated with conflict. A large part of costs fall on the country where the conflict is takes place, but there are also costs for other countries. Estimates of the economic costs of conflict in a country can be combined with case studies where more specific aspects of the economy can be treated. Investigations on the consequences for health and education are also pertinent. This paper concludes that more research on how the economic costs can be measured is still useful and needed. Even if economic costs are not considered there are many human and moral arguments for peaceful conflict resolution. The estimates of the economic costs of conflict can show us that conflict resolution without violence in most cases is also a very good economic investment.
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TERRORISM
The Economic Consequences of Terror: A Brief Survey
Households in Conflict Network (Apr. 2004)
This paper briefly surveys some of the economic consequences of the new global terrorism. The attack on the United States of 9/11 focused attention on terror in a way that previous attacks both against the United States and against populations of other countries had not. An understanding of the nature of terrorism and the magnitudes of its effects is a prerequisite for designing successful policies to prevent terror, to alleviate the costs of terrorism, or to reduce an economy’s vulnerability to attacks. The analysis of terror encompasses empirical studies and policy aspects of the fight against terrorism. Empirical studies to date have focused mainly on the short and medium-term effects of terrorism, that, in principle, are readily measured and quantified. Longer-run effects on the social equilibrium of the pluralistic western societies, that might be expected to be of lasting and greater importance but are difficult to quantify and measure, have also been addressed by the literature.
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ARMED CONFLICT
Measuring the Costs of Conflict
University of Oxford//World Bank (Mar. 2003)
Civil wars are now the most common form of major armed conflict and in this paper we examine the economic and human cost of civil war during 1960-99. The adverse consequences of the war are suffered not by the combatants but by ordinary civilians who have typically no say in either whether the conflict is initiated or whether it is settled. Using a global data set we show that a civil war of five years reduces the average annual growth rate by more than two percent. After the fighting stops a peace dividend is by no means automatic, the economic recovery very much depends on whether the country is able to implement considerable policy reform. Our survey of the human costs of conflict shows that even long after the war stops people are killed or maimed, mainly due to the destruction of public health infrastructure and population displacements. The post-war number of fatalities and casualties occurring is about as high as the numbers incurred during the war. We also consider whether these terrible costs could be seen as a high but necessary price to pay for future improvements. Many rebel movements want to change their countries' political systems for the better. However, using data on economic policy, democracy and political freedom we find that civil wars change countries for the worse.
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SPAIN
The Economic Costs of Conflict: A Case Study of the Basque Country
American Economic Review* (2003)
This article investigates the economic effects of conflict, using the terrorist conflict in the Basque Country as a case study. The authors find that, after the outbreak of terrorism in the late 1960's, per capita GDP in the Basque Country declined about 10 percentage points relative to a synthetic control region without terrorism. Moreover, changes in the per capita GDP are shown to be associated with the intensity of terrorist activity. In addition, the authors use the 1998-1999 truce as a natural experiment. They find that stocks of firms with a significant part of their business in the Basque Country showed a positive relative performance when truce became credible, and a negative performance at the end of the cease-fire. Although the authors focus on the Basque conflict, the methods applied in this article can be used to investigate the economic effects of conflicts elsewhere. The application of the techniques in this article to the study of other conflicts will also shed light on the robustness of the procedure and serce as cross validation. Research of this sort could potentially have an undesirable impact if terrorists learn that their actions affect the economy negatively, assuming that is what they want to do.
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COSTS OF CONFLICT
The Costs of Conflict: Prevention and Cure in the Global Arena
Carnegie Commission (1999)
It is often said that an ounce of prevention is worth a pound of cure. In this study, the authors investigate whether this is true with respect to deadly conflicts. More specifically, we try to determine whether conflict prevention makes sense in selfish cost-benefit terms to neighboring states, regional powers, and the international community in general. Is conflict prevention cost-effective from the standpoint of outside parties? They focus on these cost considerations because one of the main barriers to conflict prevention is motivating outside powers to take action. Contrary to what one might think, we know that international powers have often received early warning of impending trouble. If the costs of preventive actions are less than the military, economic, and political costs that have to be borne by outside powers when conflicts unfold, then the case for conflict prevention on national interest grounds becomes very strong.
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DEVELOPMENT AND SECURITY
On the Economic Consequences of Civil War
Centre for the Study of African Economies//University of Oxford (Jan. 1999)
This paper investigates the consequences of civil war for GDP and its composition. It focuses particularly upon the behaviour of the economy in the early years of a peace settlement. Civil wars are liable to be more damaging than international wars in several respects. A model of the economic effects of civil war and the post-war period is developed. key feature is the adjustment of the capital stock through capital flight. Post-war this flight can either be reversed or continue, depending partly upon how far the capital stock has adjusted to the war. The model is tested on data for all civil wars since 1960. After long civil wars the economy recovers rapidly, whereas after short wars it continues to decline. We then consider the effect on the composition of economic activity, distinguishing between war-vulnerable and war-safe activities. Evidence for Uganda shows such compositional effects to be substantial.
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Compiled by Robert Hartfiel and Barbora Farkasova
Human Security Research is produced by the Human Security Report Project at the School for International Studies at Simon Fraser University. The Human Security Report Project is funded by the governments of Canada, Norway, Sweden, Switzerland and the United Kingdom. For more information on human security visit the Human Security Gateway, an online research and information database that contains a broad range of human security-related resources.
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