It's often said that the best thing you can do to help after a natural disaster is to give money.

I have a simple question about how and where that money is sent. I imagine often resources can be donated, but money is still required to utilise them.

Is there a study showing the breakdown?

  • $\begingroup$ The answer to this is complicated, but it depends on where in the world the disaster occurs, and what aid agency you're donating to. For some very well-known disaster relief organizations, your donations will not affect their spending on a current relief effort at all, but will instead be used to build reserves for future efforts and fund administrative overhead. $\endgroup$ – dismalscience Apr 27 '15 at 23:55
  • $\begingroup$ Just a brainstorming. What happens if there is a corrupted government and does not spend the given money for environmental purposes ? $\endgroup$ – optimal control Apr 28 '15 at 13:57

One thing such funds get spent on is corruption:

Do Public Fund Windfalls Increase Corruption? Evidence from a Natural Disaster (Nikolova and Marinov (2015))

We show that unexpected financial windfalls increase corruption in local government. Our analysis uses a unique data set on flood-related transfers, and the associated spending infringements, which the Bulgarian central government distributed to municipalities following torrential rains in 2004 and 2005. We build an index of corruption using information from the publicly available audit reports, and exploit the quasirandom nature of the rainfall shock (conditional on controls for ground flood risk) to isolate exogenous variation in the amount of funds received by each municipality. Our results imply that a 10% increase in the per capita amount of disbursed funds leads to a 12.2% increase in corruption. We also present suggestive evidence that more corrupt mayors anticipated punishment by voters and dropped out of the next election race. Our results highlight the governance pitfalls of non-tax transfers, such as disaster relief or assistance from international organizations, in weak democracies.

Weathering Corruption (Leeson and Sobel (2006))

Could bad weather be responsible for U.S. corruption? Natural disasters create resource windfalls in the states they strike by triggering federally-provided natural disaster relief. Like windfalls created by the ìnatural resource curseî and foreign aid, disaster relief windfalls may also increase corruption. We investigate this hypothesis by exploring the e§ect of FEMA-provided disaster relief on public corruption. The results support our hypothesis. Each additional $1 per capita in average annual FEMA relief increases corruption nearly 2.5 percent in the average state. Eliminating FEMA disaster relief would reduce corruption more than 20 percent in the average state. Our Öndings suggest that notoriously corrupt regions of the United States, such as the Gulf Coast, are notoriously corrupt because natural disasters frequently strike them. They attract more disaster relief making them more corrupt.

  • $\begingroup$ Thanks for this answer. However I am hoping we a get another more general answer. $\endgroup$ – dwjohnston Apr 28 '15 at 21:05

Aid money is channeled towards immediate disaster relief and reconstructive/reparation efforts, depending on the needs. Examples are the following:

Immediate disaster relief costs:

  • Sending people and equipment to ensure basic safety: building structural safety, order and peace keeping, reduction of hazards from possible fuel/ gas / electricity leaks, etc.
  • Sending people and equipment to ensure basic healthcare: doctors, nurses and mobile hospitals
  • Sending food and cooking equipment

Reconstructive/reparation efforts:

  • Rebuilding and repairing public infrastructure such as hospitals, electricity and water networks, roads
  • Ensuring communication networks are functional
  • Others, depending on the case

Referring to the Haiti earthquake, you can see this example of reporting from SOS Children's Villages on their use of funds, or if you want to see how policy can be improved, you can read more from OECD.

Naturally, several emergency relief initiatives are accused of having outrageous costs, as people in these kind of scenarios are typically paid a premium for their hardship, but also due to the need of special protection or transportation equipment. An example from Haiti, helicopters or special airplanes had to be used to land in a runway which is affected by an earthquake.

Also, the chance of corruption or appearance of guerilla groups is very likely in disaster situations.

  • 2
    $\begingroup$ Adding references to your answer would make it more persuasive. $\endgroup$ – luchonacho Aug 7 '17 at 7:45

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