Design of Shock-Responsive Social Protection Programmes
© UNICEF/UN0835808/Kiliç
The frequency of natural hazards is on the rise, driven largely by climate change, and pushing millions of people into poverty each year. Countries affected experience widespread human suffering, exacerbating healthcare challenges, displacing thousands of individuals and causing billions of dollars in economic damage annually. For families and communities, disasters due to natural hazards cause the loss of income and employment, depletion of assets, and increased health expenditures. This highlights the pressing need for effective and collaborative disaster risk reduction and poverty alleviation strategies.
Social protection, and particularly cash transfers, can help address urgent needs of the population after a shock. Social protection systems are already well-used to prevent people from being pushed into poverty through measures such as cash transfer, social insurance, pensions, childcare support and free school meals. These systems can adjust when disaster strikes by either expanding their demographic reach or temporarily increasing transfer size to existing recipients in the early stages of recovery from a major shock. Providing immediate cash assistance can help households in effectively managing sudden income loss, mitigating food insecurity, and decreasing dependence on detrimental coping mechanisms. In this respect, understanding and quantifying the impact of shocks on affected populations is paramount for delivering an effective response and designing appropriate social protection schemes.
Partnering with UN agencies, the Development Analytics team has modelled and estimated the human impact of shocks ranging from disasters such as earthquakes and floods to the COVID-19 pandemic for countries including Türkiye, Azerbaijan, Bosnia and Herzegovina, Tajikistan, Georgia, St Lucia and Madagascar. Following the estimation of the shock’s impact, we simulate the poverty-mitigating potential of different cash transfer schemes responding to the shocks. By doing this, we support policymakers with an evidence base for fine-tuning social protection interventions, ensuring that they are both responsive and adaptive to the evolving needs of the affected communities.
Our Approach
Social protection systems are designed to reduce the most common risks a person faces in their lifetime. Shock-responsive systems expand this to also cover those risks at play during major shocks. During a shock, households’ income might be decimated by losing their livelihoods or assets, or they may suddenly experience huge and unplanned expenditures on healthcare. To enable systems to integrate these risks, our simulation approach models the household-level income and expenditure shocks related to the disaster through different shock channels that would reflect the shock’s impact on a household to the extent possible. Consequently, household income/expenditures will decrease, leading to a re-estimation of poverty rates.
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We estimate the impact of shocks and shock-responsive social protection schemes before or shortly after disasters strike, using existing available nationally representative datasets. Our impact assessment in Türkiye, Georgia, and St Lucia enabled agencies to understand and respond to current needs after a shock hit, whilst our estimations of flood impacts in Azerbaijan, Bosnia and Herzegovina aims to enhance preparedness for anticipated future shocks. Our technical expertise in enhancing the targeting of cash transfer systems also supports these efforts. Read more about our targeting approach here.
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To estimate the impact of various shocks in each country, our expert team has created microsimulation models fine-tuned for each country context that reflect the impact of the shock and the mitigating effect of different cash transfer schemes on household income and expenditures. We also utilise our interactive web application, the Interactive Social Policy Simulator (ISPS) to showcase these results in an interactive and flexible way. The ISPS allows policymakers to see the shock impact estimation for different shock levels (i.e. a mild or a severe shock) or selecting among different shock channels. In addition to offering flexibility in terms of assumptions regarding the shock, the ISPS empowers users to select both the size of cash transfers and the targeting towards specific demographic groups. This capability enables policymakers to craft social protection strategies that are highly responsive to the unique needs and dynamics of the affected communities.
Case Studies
Development Analytics has carried out several research projects providing insights on the poverty-increasing impact of shocks and different cash transfer approaches to alleviate these shocks’ poverty impact in various country contexts. Some of the projects include:
Developing Costed-Contingency Actions and Undertaking an Analysis of Disaster Financing Mechanisms to support the operationalization of Shock-Responsive Social Protection: A focus on Azerbaijan, Bosnia and Herzegovina, and Tajikistan
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Azerbaijan, Bosnia and Herzegovina, and Tajikistan face the risk of various natural hazards and all three countries are at high risk of flooding. Floods cause direct damage to homes, crops, and income sources and each year thousands of people living in this region are impacted by them.
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To enhance the scalability of timely cash assistance during emergencies, we are supporting UNICEF with the evidence base of projected impacts of floods and possible cash transfer approaches that can be implemented in the aftermath. We are currently developing software tools for UNICEF country offices, estimating the impact of floods on the level of poverty in each of the countries and the impact of cash transfers on alleviating this poverty impact.
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This country- and risk-specific ISPS aims to support policymakers in gaining valuable insights into the scope of such a disaster and devise cash assistance strategies to be implemented after the shock. By making use of the ISPS the countries’ readiness and preparedness will be enhanced for floods before they hit, empowering the policymakers in their planning efforts for emergency response.
© UNICEF 2024
Developing a Shock Responsive Social Protection Model for Children in Türkiye in the Aftermath of the Earthquakes using the Interactive Social Policy Simulator (ISPS)
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On February 6, 2023, Türkiye was struck by two devastating earthquakes, affecting 11 out of 81 provinces and a population of 14 million people, including 1.7 million Syrian refugees. This stands as the most severe earthquake-related disaster to hit the country in over 80 years, resulting in unprecedented loss of life, widespread destruction of homes and infrastructure, and significant economic damage.
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To support UNICEF in showcasing the calamity of the disaster and the potential positive impact of cash transfers to international donors, in the weeks following the earthquake we provided UNICEF a microsimulation model. Through the model, we estimated the potential impact of the earthquakes on household poverty and child poverty considering different shock channels. We further estimated the poverty-alleviating impact of different cash transfer modalities along with their total costs. We designed an interactive social policy simulator (ISPS) for the study to allow UNICEF to see the results of cash transfer scenarios interactively by choosing from various targeting and transfer level options.
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The study's findings were utilized by UNICEF to craft a business case, showcasing the tangible benefits of cash transfer programs in the short term. Additionally, these outputs facilitated technical preparations and advocacy efforts by UNICEF with government bodies, donors, and International Financial Institutions (IFIs) in the medium term.
© UNICEF/UN0835851/Kiliç
Microsimulation Models for Estimating the Impact of COVID-19 on Child Poverty for different UNICEF country offices
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The COVID-19 pandemic, in addition to the well-known health-related challenges, had serious socio-economic impact on households around the World. The pandemic impacted livelihoods through job losses, restrictions in working hours and caused catastrophic health expenditures for households.
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Since mid-2020, Development Analytics has been supporting UNICEF country offices in estimating the impact of the shock and understanding the poverty alleviating impact of cash transfers by designing microsimulation models for Georgia, St Lucia, and Türkiye. In this capacity, our team worked with UNICEF country offices and designed interactive social policy simulators (ISPS) for each country context to allow UNICEF offices to see the results of cash transfer scenarios interactively by choosing from various targeting and transfer level options.
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The tools provided valuable insights for informed decision-making. As a result of our policy simulation work in Georgia, a child cash transfer grant was implemented by the Government.
© UNICEF/UNI341695/Al-Adimi
Estimating the Impact of Removing Fuel Subsidies in Madagascar and Recommendations for Child-Friendly Reallocation
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Fuel subsidies lead to environmental damage through inefficiencies in energy use, they are a burden for the public budget and they are regressive, benefiting the already better-off households. Previous experience with fuel subsidy reforms around the world shows that poverty increases as a result of fuel subsidy removal if it is not mitigated with redistribution efforts like cash transfers. In Madagascar, the government decided to eliminate fuel subsidies gradually in June 2014.
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To show the potential impact of fuel subsidy reallocation as child benefits, we assisted the UNICEF Madagascar office with a microsimulation study. Initially, we analyzed the beneficiaries of current fuel subsidies, followed by estimating the potential ramifications of fuel price hikes on population poverty and estimated increase in public budget. As a final step, we assessed the impact of reallocating this budget as child benefits on the poverty rate.
© UNICEF/UN0685799/Ramasomanana
If you would like to get in touch with us and discuss the details of carrying out such a study in your country, please click to arrange a meeting with our team.