Transcript Summer school economic cost[1]

The economic costs of armed violence
• Going beyond the cost of armed conflict to states to
focus on the burden for individuals and communities
• Multiple methods exist to estimate the cost of armed
violence (modelling, contingent valuation, accounting
methods)
• Efficiency and distribution effects
The accounting approach
Direct costs
• medical & rehabilitation cost
• policing
• criminal justice system
• private security
• military expenditure
• refugees and displaced people
• physical destruction
Indirect costs
• macroeconomic consequences
(inflation, reduced savings,
investment & exports losses)
• loss of development aid;
• wealth transfers from regular to
parallel economies
Intangible costs
• quality of life (pain, suffering, trauma)
• reduced access to job opportunities,
schools & public services
• limited participation in community life
• inter-generational impacts
Economic multiplier effects
• reduced productive activity
• productivity losses due to insecurity,
limited mobility, a smaller workforce
• work hours lost & lower incomes
• lower accumulation of human capital
Social multiplier effects
• loss of social capital
• intergenerational transmission of violence
• privatisation of policing
• reduced political participation
Examples of estimates
• Collier and Hoeffler 2004: $ 64 billion for average civil war using
modelling method
• IANSA et al 2007: $ 18 billion annually cost of civil war using modelling
• Hess 2003: $ 400 billion global cost of armed conflict using willingness to
pay
• SAS 2006: Sri Lanka estimated cost of armed conflict estimated at
between 2.2-15.8% GDP (annual)
• UNDP 2006: cost of armed violence estimated at USD 2.4 million (7.3%
GDP) in 2005
Measuring the cost of destruction
Beirut’s Harek square
before and after the 2006 conflict
(UNEP 2007)
Policy opportunities:
Economic cost of armed violence
• The impact of armed violence on economic performance underlines that
crime and violence are a development issue and must be addressed as such
• Enlarge the evidence base by enhancing the methods to estimate the costly
effects of armed violence
• Create a unity of perception of future losses to make them more tangible in
the present though better measuring tools
• Get a better understanding of the distributions of cost at the regional and
sub-national level
• Better identification who bears what burden at what point in time could
foster constituencies for violence prevention and reduction
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