People affected by disasters may need external assistance in order to survive and recover. To the extent that this involves transfers to individuals, this assistance can either be provided in-kind, in the form of food aid, shelter materials, seeds or blankets, or it can be provided in cash, enabling people to decide for themselves what they most need, and to buy it in local markets.
This three-year HPG research project has looked into when the option of giving people money instead of, or as well as, in-kind assistance is feasible and appropriate. The final report builds on a discussion paper published in early 2005 on the role of cash and vouchers in emergencies, on background papers, a project to document learning around cash-based responses to the tsunami and a conference held in January 2006.
A strong body of evidence is starting to emerge to indicate that providing people with cash or vouchers works. It is possible to target and distribute cash safely, and people spend money sensibly on basic essentials and on rebuilding livelihoods. What is more, cash transfers can provide a stimulus to local economies, and in some contexts can be more cost-effective than commodity-based alternatives.
This does not mean that cash should be seen as universally appropriate. Cash responses may not be advisable in the early stages of an emergency if markets are disrupted, or in very remote areas where markets are particularly weak. Cash transfers can be delivered successfully even in conflict environments, but concerns about security and diversion will be particularly pressing in unstable contexts. However, the success of small-scale projects and pilots suggests a strong case for carefully increasing the scale of cash projects.
Questions remain over the inflationary potential of large-scale cash programmes, and how quickly and effectively markets would be able to respond to increased demand. However, none of these concerns should detract from the clear conclusion that there is scope for significantly increasing the use of cash and vouchers as an instrument in humanitarian response, in a wide range of contexts. These findings will have important implications, not just for food aid responses but also for shelter, non-food items, agriculture and wider livelihood responses.