The Effect of Refugee Inflows on Host Communities: Evidence from Tanzania

Despite the large and growing number of humanitarian emergencies, there is little economic research on the impact of refugees and internally displaced people on the communities that receive them. This analysis of the impact of the refugee inflows from Burundi and Rwanda in 1993 and 1994 on host populations in western Tanzania shows large increases in the prices of nonaid food items and more modest price effects for aid-related food items. Food aid is shown to mitigate these effects, though its impact is smaller than that of the increases in the refugee population. Examination of household assets suggests positive wealth effects of refugee camps on nearby rural households and negative wealth effects on households in urban areas. JEL codes: O12, O13, F22, R23, R12 Each week seems to bring news of more humanitarian crises. In 1980, there were 5.7 million refugees and internally displaced persons worldwide; at the beginning of 2005, there were 9 million. The burden of refugees and internally displaced persons falls on the poorest countries. Almost 3 million refugees were in Sub-Saharan Africa in 2005, home to 23 percent of the world’s internally displaced persons (UNHCR 2004). This article turns the spotlight on the millions uncounted in statistics: the hosts. In addition to hosting more refugee camps than any other country, Tanzania has been the destination of two very large population flows: Burundian refu-gees in 1993 and Rwandan refugees in 1994. The unexpected nature and size of these population movements generate a natural experiment that allows their effects on prices and household wealth in the western Tanzanian regions hosting the refugees to be examined. Jennifer Alix-Garcia (corresponding author) is an assistant professor in the Department of Agricultural and Applied Economics at the University of Wisconsin, Madison; her email address i