Evaluating the effectiveness of emergency relief of the Central Emergency Response Fund after natural disasters

Abstract

Natural disasters are increasingly common and emergency relief is often provided to help the affected countries recover. The United Nations started the Central Emergency Response Fund (CERF) in 2005 that allows for fast allocation of money to providers of humanitarian aid. This thesis evaluates this fund with respect to natural disasters, since its effectiveness can have implications for future emergency relief allocations. The following question is answered: Do the grants provided by the Central Emergency Response Fund decrease the output growth volatility caused by natural disasters? A panel database is constructed and dynamic panel models are estimated by applying the Generalised Method of Moments. Results show that when CERF funding is provided after a natural disaster, the expected effect on output growth volatility of the natural disaster is neutralised and close to zero. This implies that CERF funding is effective, however, reports on the functioning of CERF report possible improvements concerning the allocation. Furthermore, alternative estimation methods might provide consistent results. 92 Marble Research Papers decrease the output growth volatility caused by natural disasters? The question is split up in three elements. First, it is important to know what happens to an economy when a natural disaster occurs. Second, the CERF allocation of Rapid Response grants is relevant and its economic impact. Third, the combination of a natural disaster with CERF funding on the output growth volatility, which is the main focus of the thesis. This thesis first provides a theoretical framework, where concepts are defined and previous research is discussed. Next, the methodology discusses the models, data and estimation method used. This is followed by the data analysis and estimation output, and in the discussion results are interpreted. Finally, the conclusion summarises the results, answers the research question and mentions the limitations of this research.