Valuing the Resilience Dividend
Just months after I became president of The Rockefeller Foundation, New Orleans experienced one of the worst disasters in American history: Hurricane Katrina.
While we did what we could to help address the human suffering in the immediate aftermath of the storm, The Rockefeller Foundation understood that the scale of this disaster was long in the making, due to a compendium of social, economic, and environmental challenges that had been simmering for decades, and because strategies that were designed to address crisis and natural shocks were narrow. In the rebuilding and recovery we saw an opportunity for the city to take a longer, more holistic view of the capacity of individuals, communities and systems to survive, adapt, and transform in the face of shocks and stresses. We wanted the city—and thousands of other communities—to develop that capacity to recover quickly and effectively when crises arise.
At the time, we didn’t call it resilience, but that’s what it was.
As the field of resilience has advanced during my tenure as the president of the University of Pennsylvania and in the twelve years I’ve led The Rockefeller Foundation, I’ve often spoken of the co-benefits that resilience planning and projects provide communities above and beyond the immediate mitigating solution—unrecognized benefits like social cohesion, job opportunities, environmental protections, and space for public use. My colleagues and I have shared that collaborative planning processes help unify communities by engaging diverse and widespread input, which builds social capital and supports cohesion. How smart urban planning can not only connect a fractured community, but also provide open space, protection against natural disasters and at the same time provide job opportunities for local residents. We looked at how an investment could be deployed to deliver multiple positive returns and serve communities in both the good times and the bad times. In fact, in 2014, I wrote a book that sought to better explain the added returns that resilience planning, projects, and practices offered, entitled: The Resilience Dividend.
While the field of resilience is now more widely recognized, and the dividends that resilience concepts and planning provide are more widely appreciated, we have lacked a systematic, comprehensive way to truly measure and quantify the actual value of those returns.
In collaboration with The Rockefeller Foundation, the RAND Corporation developed the Resilience Dividend Valuation Model. This new tool allows communities and decision-makers not just to appreciate the intrinsic value of resilience, but to quantify its economic value. This model allows decision-makers to estimate the resilience dividend, allowing communities and decision-makers to better understand multiple short and long-term benefits—whether they are economic, social, or environmental— of investments. It allows them to compare on an apples-to-apples basis the expected effects of different investments—particularly with respect to public dollars—on the outcomes that matter most to their communities.
Dividend Helps Prove the Value of Resilience
Valuing the dividend is critical to more fully understanding why we should build resilience and encourage resilience planning. The full impacts are often not immediately recognized, and can be difficult to estimate. But, like major infrastructure investments that forecast decades worth of economic benefit, we must do the same for resilience planning if decision-makers are to invest in policies and projects that promote resilience, and encourage the public to support those investments.
We have therefore designed a model that communities can use to map out the relationships among their assets, people, and goods and services that could benefit from a resilience approach, and then estimate the effects of that project compared to a non-resilient approach. The resilience dividend is the difference in the outcomes between the scenario with a resilience approach and without. Beyond quantifying the direct returns to the immediate goal, the model helps highlight the co-benefits—societal as well as financial—of a project that decision-makers may otherwise overlook.
Demonstrating How Valuing the Resilience Dividend Works
Let’s look to southeastern Pakistan to understand how we determine the value of a resilience dividend. In 2010, Oxfam conducted projects in three districts in southeastern Pakistan aimed at building farmers’ resilience to negative effects of food price volatility. The projects supported agricultural production, improved access to safety nets, and built local-level institutional capacity.
Among other difficulties that the farmers faced, they traditionally depended on loans from middlemen to buy seed and other supplies at the beginning of each planting season and paid them back after harvest. They also frequently sold their crop at sub-optimal prices post-harvest at the height of supply. Furthermore, these communities lacked access to safety nets when times got tough, like when the harvest was poor or when a flood occurred.
Considering the problems at hand, Oxfam took a holistic approach with three integrated components to address these challenges.
- Oxfam provided farmers with a season’s worth of agricultural inputs. This was intended to reduce their dependence on the middlemen and break the debt cycle, diversify farmers’ crop choices for consumption and sale, and educate them about other seed options and modern agricultural practices that could affect the long term fertility and sustainability of the agricultural system. By moving up the value supply chain, households could increase incomes as well as plant crops for household consumption that would normally be bought at markets.
- Oxfam also established grain banks in some villages where farmers could deposit their grain to sell later when prices are higher, to plant in the next season, or to consume in times of need.
- They helped organize farmer co-operatives that promoted cost-sharing of productive technologies and marketing efforts, encouraged farmers to share best practices. These interactions would also help build strong community ties which would support people’s ability to play a proactive role in shaping their lives and the future development of their communities, despite growing risks and uncertainty.
So what evidence do we have of a resilience dividend?
- Effect on household income: RAND estimated that Oxfam’s intervention increased annual agricultural income by approximately 20 percent per household in the year after the project. That’s an additional $400 per year that households could spend on farm equipment, goods at local businesses, or children’s education, to name a few.
- Effect on the community: These gains can be re-invested into other community priorities, creating a cycle of reinforcing benefits that could persist long into the future. Time will tell if this is the case. But the resilience dividend model can help us think about the linkages involved and the data needed to assess these long-term benefits.
- Effect on individual decision-making: Using the data Oxfam collected 2 years after the project ended, RAND found that the project changed the way that farmers went about growing crops. Certain practices and crop varietals were shown to increase incomes in the region, and there is strong evidence that the project resulted in increased adoption of new fertilization and cropping practices. If these changes persist, the project will have significant long-term implications for communities that participated.
The resilience dividend can be seen in both the short-term and long-term benefits. While the seed bank was intended as a form of insurance to help the communities better withstand immediate shocks that resulted in crop loss or price shocks, this is only part of the story. These seed banks also allowed for a continued break from the debt cycle by providing a means to store seeds to be sowed in subsequent years. Furthermore, by providing information and materials, Oxfam aimed to change the way that farmers grew their crops, providing potentially lasting benefits that would benefit the communities for years to come.
The Resilience Dividend Can Have Broad Benefits
Oxfam’s project in Pakistan is just one example of how resilience projects can both protect against risks and create co-benefits that have the potential to be transformational. The Resilience Dividend Valuation Model can be applied to different types of resilience projects and policies across different scales to show the variety of resilience benefits each can offer. There is quantifiable, economic value connected to resilience. Valuing the economic and social worth of resilience projects and policies, and creating the models and data necessary to do so, will better inform decision-making. And that will support the capacity of individuals, communities, and systems to survive, adapt, and grow in the face of the shocks and stresses of the 21st century.