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Forecast-based Financing in the Red Cross Red Crescent Movement

Forecast-based Financing in the Red Cross Red Crescent Movement. Photo: Mozambique Red Cross in action. Cyclone Idaï 2019. Objectives of this session. Increase understanding of the Forecast based Finance concept Explanation of the Forecast based Action by DREF fund. Photo: Pixtabay.

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Forecast-based Financing in the Red Cross Red Crescent Movement

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  1. Forecast-based Financing in the Red Cross Red Crescent Movement Photo: Mozambique Red Cross in action. Cyclone Idaï 2019

  2. Objectives of this session • Increase understanding of the Forecast based Finance concept • Explanation of the Forecast based Action by DREF fund Photo: Pixtabay

  3. What is Forecast-based Financing? A mechanism that enable access to funding for early actionbased on credible forecast and in depth risk analysis

  4. Key components of Forecast-based Financing

  5. Early Action are all the activities that can take place before a potential disaster in order to prevent and/ or mitigate a disaster and /or to prepare for effective response. Forecast based Financing takes advantage of the window period between the issuance of an alert and the occurrence of the anticipated event Meaning of ‘early action in the Forecast based Financing context

  6. Example of Forecast based Early Actions Potential early actions that could be implemented across forecast timescales In this case, the disaster impact (due to floods) to be tackled is internal displacement Source: ODI 2019. Scaling FbF in Kenya study

  7. What does a credible forecast and risk analysis mean? Forecast The FbF mechanism uses forecast(s) that have good enough skill to predict when and where the potential hazard will happen and what is its strength Risk Analysis The FbF mechanism uses the best available exposure, vulnerability and historical disaster impact data to identify priority areas/communities to intervene with early action

  8. Evolution of Forecast based Financing in the Movement 2019 - More than 22 National Societies implementing FbF 2018 - IFRC establish a funding mechanisms for Early Action - FbA by DREF 2016 - IFRC pledge to increase Forecast-based Financing during the World Humanitarian Summit 2015 - German Government develops an strategic action plan that supports FbF - new pilots start Peru, Bangladesh and mozambique - First FbF Dialogue Platform 2013- First pilot projects start in Uganda and Togo 2008- IFRC test the FbF concept in west africa, based on a seasonal forecast Volunteer in FbF activation 2016

  9. Implementing the mechanism How is the Red Cross Red Crescent leading the way on Forecast based Financing? Quick Brainstorming!

  10. Forecast based Financing building blocks NS early action capacity enhancement Trigger model FbF integrated in National Society strategies Early Action Protocol validation FbF feasibility study and Road Map FbF Technical working groups Early Actions NS leadership Sources of funding for Early Action FbF Project Monitoring and Evaluation (PMER)) Source: FbF building blocks. 2018

  11. Forecast based Financing step by step

  12. What is the Forecast based Action by the Disaster Relief Emergency Fund (DREF)?

  13. Early Action Protocol guidelines Early Action Protocol Template and Criteria Photo: First FbF activation, Uganda. 2015

  14. Early Action Protocol validation Once the EAP is approved it will be eligible to get automatic funding once a trigger is reached How is the EAP validated? Photo: Early Action Protocol activation in Peru for Cold Waves 2016

  15. Feasibility study Risk Analysis Hazard selection Historical impact Exposure analysis Vulnerability analysis Inventory of forecasts Development of an EAP Hazard magnitudes and impact Selection of early actions Validation and acceptance Impact-based forecast intervention map FbA EAP summary Monitoring of forecast Readiness actions and pre-positioning Trigger Early actions Lessons learned + evaluation and reporting Revalidation Forecasted event

  16. Process: Once an Early Action Protocol (EAP) is validated Validation of EAP Triggered action Annual reporting on EAP Annual reporting on EAP Re-validation of EAP Revised EAP based on lessons learned and after-action revierw Allocation of annual readiness costs Allocation of annual readiness costs Allocation of pre-positioning and initial readiness costs Allocation of triggered action funds

  17. Why Monitoring and Evaluation is important for Forecast based Financing interventions?

  18. The benefits of Forecast based Financing: Bangladesh (2017) An FbF EAP was activated in Bangladesh in 2017 in anticipation of extreme river flooding. A rigorous impact evaluation was conducted and found a number of important benefits of FbF. • FbF intervention: distribution of unconditional cash grants • Key benefits:FbF contributed to • Greater household food security • Less psychosocial stress during and after the flood period • Reduction in high-interest debt accrual of vulnerable households

  19. The benefits of Forecast based Financing: Mongolia (2018) An FbF EAP was activated in Mongolia in the 2017/2018 winter season in anticipation of extreme winter conditions known as “Dzud”. An evaluation was conducted among FbF beneficiaries and comparison herder households. FbF intervention: distribution of unconditional cash grants and animal care kits • Key benefits:FbF contributed to • Assistance came just as winter conditions were becoming extreme • Households were short on hay and fodder reserves → FbF cash assistance allowed beneficiaries to stock hay/fodder before extreme conditions • Enabled herders to buy hay at discounted rates (early enough before price surge) • FbF assistance may have contributed to reduced animal newborn mortality (results pending).

  20. Scaling up and integrating Forecast based Financing into National Systems: Social Protection, an opportunity E.g. Brazil’s Bolsa Família provided in-kind and cash benefits to 162,000 families in 279 municipalities, within 10 days of the 2011 floods using its registry of beneficiaries and identification cards What is Social Protection? Set of policies and programs aimed at preventing or protecting all people against poverty, vulnerability, and social exclusion (for instance social safety nets: cash transfers, cash for work)

  21. Considerations for urban Forecast based Financing

  22. Conclusions • The implementation of FbF in the Red Cross Red Crescentoffers the opportunity to protect the most vulnerable population to minimize the risk of disasters and prepare for effective response. • FbF needs to be integrated into the National Society Disaster Risk Management strategies and it should build up and be connected to contingency planning. • Enhancement the National Society capacities for early action is crucialto guarantee impactful forecast-based actions.

  23. Thank you! For more information visit: www.forecastbasedfinancing.orgAnd: https://www.climatecentre.org/programmes-engagement/forecast-based-financing and FEDNET FbF section! Contact: fbf@climatecentre.org

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