The Triple Dividend: Investing in resilience to boost growth and job creation

Today, the lingering ramifications of the pandemic, surging debt, stalled poverty reduction, and violent conflict are all threatening growth prospects. Many countries face tepid growth, partly due to underinvestment in people, infrastructure and productivity. As climate change translates into more frequent and intense disasters, it is important to invest in adaptation and resilience. But as resources are scarce, countries must ensure that investments in building resilience also contribute to their broader growth objectives and strengthen their development strategies and economic policies.

Disaster preparedness and resilience measures were traditionally seen to serve one purpose: reducing losses when shocks occur. While valid, this narrow perspective makes resilience measures politically challenging – especially when large up-front investments are needed to protect against low-probability events, so that benefits seem uncertain and distant. The time that passes before a major hazard, like an earthquake or cyclone, long exceeds average political mandates and attention spans, when countries have other urgent daily needs. And even when the right intervention prevents a disaster from happening, this success is hardly visible and easily overlooked. That’s why it is critical to highlight the potential immediate economic gains resulting from resilience investments, such as flood protection, drainage systems, early warning systems, or shock-responsive social protection.

That’s why, exactly 10 years ago, we introduced the Triple Dividend of Resilience, a report funded by the Global Facility for Disaster Reduction and Recovery (GFDRR), to better capture the development contributions of disaster and climate resilience. It highlights that investments in disaster prevention, preparedness, and resilience yield tangible economic and social returns — or dividends — regardless of whether or when a shock occurs.
 

Dividend 1: Saving lives and avoiding losses

Let’s state the obvious first: By preparing for shocks and disasters, we can mitigate their impacts when they happen. For instance, investments in flood protection in Poland prevented what could have been large scale flooding in 2024. In Japan, countless lives are saved each year by high seismic standards throughout its infrastructure, and multi-hazard early warning systems.

Resilience investments also mitigate the impacts of frequent smaller shocks— such as seasonal flooding, heatwaves, or storms. Their impacts are less visible as they tend to cause more economic than physical damage, but often weigh heaviest for poorer groups. In Kinshasa, regular rainy season flooding costs $1.2 million per day as commuters’ time is lost in navigating flooded and congested streets. In Tanzania, businesses report relatively low on-site damages from seasonal flooding, but flood-induced transport and power disruptions cause over $250 million in indirect losses per year.

Dividend 2: Economic stimulus, job creation, and investments

Risk, volatility and uncertainty are widely recognized by economists to suppress key drivers of growth and job creation. Unpredictability reduces planning horizons and positive risk taking. Looming background risks — like the possibility of instability, regulatory uncertainty, or financial crises — cause firms to hold back on investments that boost capacity and productivity, including technology upgrades, hiring, or research and development.

The same is true for looming natural risks — when the lack of disaster prevention measures means that shocks could quickly wipe out newly upgraded manufacturing equipment, then firms refrain from such investments. In the Caribbean, tourism managers are more likely to invest in new facilities if they don’t anticipate them to be soon destroyed by hurricanes.

In short, when downside risks are well managed, then households and firms are reassured to invest in upside opportunities. They are less likely to hold on to cash reserves to cope with potential shocks and instead invest in productive assets that can drive economic prospects, modernization, and job creation.

And the benefits can extend to entire communities. Because unmanaged disaster risks make land less attractive, risk reduction measures can boost property values and associated tax revenues. In Dar Es Salaam, Tanzania, flood-prone properties face a 30 percent discount compared with flood-safe properties. In Buenos Aires, Argentina, flood protection investments could lead to land value appreciations that would more than offset the investment costs.
 

Dividend 3: The co-benefits

Today, resilience measures are increasingly designed to benefit communities beyond just reducing risks. To avoid displacing people, communal spaces, and biodiversity, these investments are often integrated into the existing social and natural environment. Nature based solutions demonstrate how we can manage disaster risks, such as extreme heat or flooding, while providing green parks and urban regeneration that provide neighborhood amenities year round. Mangrove belts in Vietnam not only mitigate storm surges but also support ecotourism. Resilient public infrastructure not only withstands shocks, but also offers higher service quality and reliability.

These co-benefits are central to realizing the gains from urbanization. After all, enhanced livability and quality of life make cities more desirable destinations for tourism, investments, and skilled labor.
 

Managing risk is a foundation for growth

High capital costs —especially in many lower-income countries—are a key obstacle to growth and investment, often aggravated by a risk premium that reflects macroeconomic instability, weak institutions, or policy uncertainties. Natural hazards and frequent disasters exacerbate these risks, contribute to high capital costs, and suppress investments in growth. However, because investments in resilience can reduce losses, unlock investments, and deliver short-term amenities, they can be a powerful lever for accelerating development. Recent estimates even suggest that their economic dividends can far exceed the avoided disaster losses. Thus, resilience measures – and each of their dividends – play a key role in shaping thriving cities and communities that support socio-economic development and growth.