The Drought Financing Facility


The Drought Financing Facility is envisaged as a network of national facilities that will support frontline responders to access early, predictable funds to deliver activities to protect vulnerable communities at risk.

Credit: Atmospheric Research CSIRO | commons.wikimedia.org

About Drought Risk Financing


Despite advances in forecasting techniques, delay has become a ‘defining characteristic’ of food security response, with aid arriving only after a crisis escalates.

Research suggests that earlier response, such as protective cash transfers, livelihoods interventions, seed distribution etc. can protect communities, bolster their resilience and do all this at lower cost than traditional ‘late’ humanitarian response . However, even when a humanitarian crisis is unfolding, funds of sufficient quantity usually do not materialize until too late.

 

The Start Network is addressing this problem by working on two new financing instruments that will enable responders to access rapid funds for early drought mitigation activities to protect communities at risk.

 

Underpinning both facilities is a disaster risk financing approach, that involves scientific modelling of drought risks, focused scenario-based contingency planning and pre-positioned financing

 

Through this programme, we aim to shift humanitarian response away from its current reactionary ‘begging bowl’ model of voluntary contributions to an anticipatory one - enabling early, pre-planned and pre-financed interventions that save lives, livelihoods and costs.

How it works


The risk management approach of the facilities involves three key components:

 

- Science-based risk modelling that allows us to understand and quantify the risks of drought in our areas of operation. This draws on a scientific model developed by our partners that can capture drought risk in any country using estimates of soils moisture combined with knowledge of agricultural cropping patterns and land cover topology

- Contingency planning/Scenario Based Response Planning that outlines what drought mitigation activities will be carried out when and by whom under different crisis scenarios, thereby facilitating a more timely and coordinated response

- Pre-positioned financing to deliver response plans, including insurance mechanisms that automatically release funding based on pre-defined triggers of emerging major drought. The model takes a risk-layering approach with contingency funds used for more frequent but relatively minor events, while insurance reacts to only less frequent but severe events.

 

Piloting the facilities

We are prototyping the Drought Financing Facility in two locations, Pakistan and Zimbabwe and Start Network's members and wider stakeholders are being supported through the design steps required to establish a national pilot. This is a participatory process that involves the Start Network NGOs, their community partners and wider stakeholders such as Government, UN or other.

 

The preliminary design process is concluding mid 2017, with active pilots scheduled for 2018. 

 

This programme, the first of its kind, is led by Start's member NGOs, with the facilities being developed in partnership with GlobalAgRisk, with funding from the Humanitarian Innovation Fund until June 2017.

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