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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