Manual for Forecast-based Financing

This document provides technical guidance for the design of Forecast-based Financing (FbF) interventions. It has been developed from the lessons and experiences of several ongoing pilot projects, making this manual a living document that will be updated on a regular basis. 

The target audience for this document includes disaster risk managers, meteorologists, hydrologists and people working in other disciplines that are involved in the design of FbF mechanisms. This manual will be used by governments, humanitarian and development organizations.  

Each of the guides of the manual offer a set of general ideas for implementation of FbF interventions, they are mainly an advice and by no means a mandatory step by step process. Although they describe steps, the implementation of them will depend on the context they will be used in.  

It is divided into 7 sections, which can be accessed through the links below:

This Manual aims at providing guidance for the implementation of the Forecast-based Financing strategy for the German Red Cross, but also for the Red Cross Red Crescent movement and partners.

Many colleagues from the Red Cross Red Crescent Movement, NGOs, UN agencies and academic institutions have giving advice, providing information, commenting on drafts and improving progressively this manual. 

Special thanks are due to the Peruvian Red Cross, Bangladesh Red Crescent, Uganda Red Cross, Mozambique Red Cross, Togolese Red Cross, Tanzania Red Cross and Ethiopian Red Cross for leading the implementation of Forecast-based Financing pilot projects, lessons and good practices from these projects have made this document possible.  

Expert reviews of drafts were also provided by colleagues from the International Federation of Red Cross and Red Crescent Societies (IFRC), Start Network, World Food Programme (WFP), Food and Agriculture Organization (FAO), Deutsche Welthungerhilfe (WHH), World Vision, International Research Institute for Climate (IRI), United Nations Development Programme (UNDP), University College London STEaPP (UCL), Reading University, Oxford University (Institute for Science, Innovation and Society) and University of Lugano, among others.

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Further Documents for the Introduction to the Manual

Download Fbf Strategy 

>> Fbf and SFDRR SDGs PA

Glossary of Terms for Forecast-based Financing

The terminology presented in the document has been analyzed in detailed by practitioners that are implementing FbF interventions, as well by a broad number of actors involved in Early Warning Early Action.

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Feasibility Study for Forecast-based Financing Interventions 

Criteria for identification and design of Forecast-based Financing Interventions

Forecast-based Financing (FbF) is a mechanism that uses climate and weather forecasts to trigger timely humanitarian action, before a hazard hits the exposed population. These actions are automatically funded when the triggering forecast is released.

This mechanism has been progressively developed since 2008. Several pilot projects are ongoing, which are contributing to build evidence about the potential to transform the current humanitarian system. Lessons, best practices and recommendations from these projects are the base for the development of a solid Forecast-based Financing knowledge management strategy.

A successful Forecast-based Financing implementation will depend on several aspects, ranging from availability of risk information to engagement of potential stakeholders. 

Learning from ongoing pilot experiences, this guide sets out a set of new considerations that can be used to select intervention areas that are most “ripe” for the introduction of Forecast-based Financing, encouraging the establishment of interventions that further consolidate knowledge and practice in this area. Based on the results of discussing each of the questions in this document, practitioners can focus their priorities in the design of a specific Forecast-based Financing intervention, focusing on the areas that need greatest support.

The guideline is divided in four parts: Risk Assessment, Forecasts Capabilities, Government Level and Organization Level analysis. After exploring each of these considerations, practitioners can select countries and/or regions for Forecast-based Financing interventions, and gain an understanding of which hazards would be ideal for each project. The qualitative responses can also indicate where more work should be directed in a particular intervention; for example, if one region has excellent forecasts but not enough information about risk factors, extra effort in the project should be focused on identifying and analysing those risk factors rather than focusing in forecast capacity, in the same direction if the feasibility study identify that the DRM capacity of the implementing organization needs improvement, the project/intervention could include a component of capacity building . At the end of this guide, there is a set of suggested question that could be used by the researcher to guide the study towards a deep understanding of the best strategy to implement a Forecast-based Financing intervention.

Target Audience for this guide: 

Scoping studies can be done directly by technical staff of the implementing organization/government, or could be conducted by external consultants. The process could take from one week to one month, depending on the level of details and geographical extension that is targeted.

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A guide to trigger methodology for Forecast-based Financing 

This guide will outline the design process of an impact-based forecasting methodology to be used to define forecast-based financing (FbF) triggers. It is meant to support stakeholders involved in developing triggers and provides step-by-step instructions and examples on how to do this. This is a living document, based on ongoing projects; it will be periodically updated to include best practice and lessons learned. If you have suggestions, please email: fbf(at)climatecentre.org.

Firstly, lessons learned from pilots around the world are presented.
Second, each of the steps to develop triggers will be explained in detail.
The target audience is institutions and/or government agencies interested in developing impact-based forecasting systems to enable early action.

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Prioritization of Forecast-based Actions

This document presents reflections and lessons from the experience of several ongoing Forecast-based Financing pilot projects. It provides a 6 step process to select forecast-based actions that will be automatically funded and triggered based on forecast information. It is an illustrative reference document for Forecast-based Financing interventions. Red Cross and Red Crescent national societies and other humanitarian and development organizations engaged in Forecast-based Financing are encouraged to use this selection process in a flexible way for an effective outcome of their interventions, follow the process in the most flexible and iterative way according to the respective context.

Forecast–based Financing (FbF) is a mechanism that uses climate and weather forecasts to enable timely disbursement of funds to implement advanced preparedness actions before a potential disaster happens and early response intervention. Many times, early actions are not taken due to lack of available funds in the exact moment when they are needed or because of a lack of quality forecast information, absence of systems and procedures to use these funds effectively and also due to the short window of time for early action. The disbursement of funds for emergency assistance can then only provide relief after the fact, meaning only after the disaster strikes. Forecast-based Financing enables the implementation of these early actions, prior to a disaster, based on a sound understanding of risks, hazards, vulnerabilities, exposure, impacts, danger levels, forecast capability, predetermined triggers and precise community-level actions that can be implemented within the lead time.

Forecast-based Financing aims to build on existing early warning early action strategies and preparedness plans to minimize disaster risks and reduce the impact of disasters in communities ( see Early Warning Early Action - Mechanisms for Rapid Decision Making ). Institutionally, it will improve operational preparedness and response capacity to act early to reduce the impacts of disasters. Early response should be considered to deal with the residual risks (as risk 0 does not exist). Timely and qualitative response will ensure that further suffering is avoided.

Target Audience for this guide:

Prioritization of forecast-based actions requires engagement of actors at all levels, from residents, community committees, DRR field committees, civil society organizations, government (local and national) departments, Red Cross and Red Crescent national societies, United Nations agencies and other humanitarian and development organizations, research institutions including climate science community and private sector and other relevant actors. This guide could be used a broad range of actors. 

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Early Action Protocol (EAP)

This section is currently under revision.

You can have a look at the EAP template in the meantime.

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Monitoring, Evaluation, Accountability and Learning​

Introduction: Why do we need “MEAL” for FbF?

Forecast-based Financing (FbF) is a relatively new concept with potential to reduce disaster impacts through increased use of available science to inform preparedness decision making. Since FbF is in its early stages of implementation, monitoring, evaluation and learning are crucial to measure the effectiveness and success of the approach.

Every FbF project should be built on a comprehensive strategy for Monitoring, Evaluation, Accountability and Learning (MEAL) to inform the project design and implementation with the knowledge and evidence it generates. Therefore, it is recommended to review this document early in the project design phase.

The target audience of this guide are FbF implementers, irrespective of whether they are Red Cross Red Crescent National Societies, government institutions, civil society organizations, individual implementing agencies, or funding providers.

Purpose of this guide

The purpose of this short document is to provide a holistic perspective on the different elements that make up the FbF MEAL framework, and to help FbF implementers to think through and answer the following questions, by providing concrete guidance and references to further resources:

1. What does "success" mean for an FbF intervention, and how can it be planned for strategically?

2. How can this be captured in a theory of change?

3. How can we track progress towards achieving operational goals?How can we measure the effectiveness and beneficiary impact of FbF implementation?

4. What is the cost-benefit relationship of a specific FbF action?

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Forecast-based Financing Financial Mechanism

This section is currently under revision. For a general overview about the Forecast-based Action (FbA) by the DREF, please have a look at our new brochure.