Early warning Early action Early recovery the Community

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Early warning Early action Early recovery: the Community Early Recovery Voucher CERVO WFP Ulrich

Early warning Early action Early recovery: the Community Early Recovery Voucher CERVO WFP Ulrich Hess, Chief Risk Reduction & Disaster Mitigation, WFP Niels Balzer, DRR Officer, WFP

The need: predictable Disaster Recovery Vulnerable People expect disaster recovery to be • Predictable:

The need: predictable Disaster Recovery Vulnerable People expect disaster recovery to be • Predictable: “guaranteed” benefits without hassle • Timely: swift payout/hand-outs • Objective: clear verifiable basis for payouts and no discrimination

Natural Disasters • Recurrent, more frequent • Big three (drought, flood, wind) cause most

Natural Disasters • Recurrent, more frequent • Big three (drought, flood, wind) cause most of the misery and relief costs • 2. 6 billion people at risk (WB IEG) • 177 million people affected in 2007 (CRED) • Around half of WFP budget goes to natural disaster relief and rehabilitation

The Mechanism: CERVO • delivered via trusted delivery channel to vulnerable people • redeemable

The Mechanism: CERVO • delivered via trusted delivery channel to vulnerable people • redeemable when triggered by objective index (based on public Weather Station or Satellite data) immediately after weather shock • Standardized payouts for one-in-seven and one-in-ten flood, drought, wind) • targeted to those communities that systematically reduce disaster risk • Costs only small transaction coverage fee – risk cost are paid by government and donors

Hurricane Example: Belize CERVOVo Hurricane Payout Table Windspeed Category Distance over water (Miles) 50

Hurricane Example: Belize CERVOVo Hurricane Payout Table Windspeed Category Distance over water (Miles) 50 60 70 80 Windstorm $20 0 CAT 1: $40 $20 0 0 CAT 2: $60 $30 $20 0 CAT 3: $80 $40 $30 $20 CAT 4: $100 $60 $40 $30 CAT 5: $200 $100 $60 $40 Index: Storm Tracker products (NOAA, others) 50 mile radius

Flood Example: Ghana – Basis: Flood Risk Mapping – Flood Detection: Spatial Aperture Radar

Flood Example: Ghana – Basis: Flood Risk Mapping – Flood Detection: Spatial Aperture Radar technology • Low Resolution flood detection mask • Extreme Precipitation triggers High Resolution Image (Response time: between 18 and 36 hours) • Revisit time: less than 12 hours in case of a crisis – GPSing of CERVO buyer + cell phone number for early warning and payout notification – Payout if CERVO gridcell of 1 x 1 km is to 80% inundated

Drought Example: El Salvador Basis: 12 month Standard Precipitation Index Payouts for: • Severe

Drought Example: El Salvador Basis: 12 month Standard Precipitation Index Payouts for: • Severe drought: $US 50 • Extreme drought: $US 100 • Catastrophic drought: $US 200 Severity Classification of Minor severity of Drought drought Moderat e Drought Severe Drought Extreme Drought Exceptionall y Bad Drought

Distribution • • Rural Post Offices, Banks Microfinance institutions (possibly via Smart Cards), Agricultural

Distribution • • Rural Post Offices, Banks Microfinance institutions (possibly via Smart Cards), Agricultural cooperatives, Input suppliers, Traders WFP offices, sub-offices, associated NGOs

Risk transfer payments $ Donor + Gov Matching funds Master CERVO Community

Risk transfer payments $ Donor + Gov Matching funds Master CERVO Community

CERVO Payouts

CERVO Payouts

CERVO cost sharing CAT Risk Transfer Risk Pooling Total Risk Transfer Cost Climate Change

CERVO cost sharing CAT Risk Transfer Risk Pooling Total Risk Transfer Cost Climate Change “Normal” pure Risk Premium (average payout) 2 USD Bond? 5 USD Donor and Premium funded 2 USD CC adaptation funds 8 USD Government + Donors premium support 1 USD Final Cost for household