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

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 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 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 50 mile radius CERVOVo Hurricane Payout Table Windspeed Category Distance over water (Miles) Windstorm$20000 CAT 1:$40$2000 CAT 2:$60$30$200 CAT 3:$80$40$30$20 CAT 4:$100$60$40$30 CAT 5:$200$100$60$40 Index: Storm Tracker products (NOAA, others)

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 1x1km is to 80% inundated

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 severity of drought Minor Drought Moderat e Drought Severe Drought Extreme Drought Exceptionall y Bad Drought

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

CERVO Payouts

CERVO cost sharing Normal pure Risk Premium (average payout) Risk Pooling Climate Change CAT Risk Transfer 8 USD 2 USD 5 USD2 USD Bond? Donor and Premium funded CC adaptation funds Final Cost for household Total Risk Transfer Cost 1 USD Government + Donors premium support