The humanitarian crisis in Ukraine, and the vast numbers of refugees created by it, have raised inevitable conversations around the kind of support and assistance offered to refugees. The UN Refugee Agency suggests there are around six million refugees living in camps in 2021 due to a variety of conflicts around the world.

A number of humanitarian organizations (HOs) are trying to help people who are currently struggling to integrate into their host country. Sometimes this assistance is via cash donations, while other times it is via in-kind assistance, such as food items. These cash donations are designed to provide independence and dignity to people, but research from Ohio State University highlights some of the challenges they can also bring.

“We recommend HOs and local governments partner to adopt a price-dependent cash assistance (PDCA) policy that restores the distorted incentive due to the introduction of cash assistance. In doing this, refugees gain the power of meeting their individual needs while retailers sell more products (and make at least the same profit as before) and residents enjoy lower prices,” the researchers say.

Cash assistance

The researchers explain that cash assistance programs can often be exploited by local retailers, especially in rural settings where a small number of providers have significant market power. The study examined the situation in northwestern Greece, where there are three refugee camps.

“A PDCA policy aligns the incentives between the retailer and the HO-government partnership. This new policy for cash assistance acts as a lever for the retailer to voluntarily set desirable prices, which benefits both refugees and their host community,” the researchers explain. “It’s important for HOs to demonstrate to the local governments that there are economic benefits of welcoming refugees into communities.”

The researchers believe that this easy-to-implement policy can help HOs to better allocate their funds to ensure that the assistance they provide to refugees is effective in areas where local market power is strong.

“If an HO provides cash assistance without considering the retailer’s market power, the HO will inadvertently harm the refugees and residents. Our policy provides a rare win-win-win,” the researchers conclude.