Drought insurance for early response
25 May 2015
This report outlines the design of a new funding mechanism that will ensure more timely humanitarian response to emerging drought-induced food and livelihood crises. The design of this mechanism was carried out through joint partnership between the Start Network and GlobalAgRisk, with support from the Humanitarian Innovation Fund.
The basis of the mechanism will be a parametric insurance facility that releases automatic funding based on pre-defined triggers of emerging major drought. The science-driven, predictable nature of this trigger mechanism allows us to circumvent many of the systemic issues which currently prevent early warning information from being converted into resources for early action. This offers an alternative direction for donors and the wider humanitarian community.
The vast majority of front-line crisis relief (70%) is provided by civil society. However, these NGOs are constrained by a funding model in which attention from donors and the general public is triggered by media headlines. Even when a known humanitarian crisis is unfolding,funds of sufficient quantity often do not materialize until crisis images are released to international audiences. At this stage many lives have already been lost, livelihoods destroyed and hard-won development gains undermined. In food security crises this problem is particularly acute; delay has become a ‘deﬁning characteristic’ of response. This is despite increasing recognition that earlier response can effectively protect communities, bolster their resilience and do all this at lower cost than traditional ‘late’ humanitarian response.