Red Cross/ Red Crescent Climate Centre

Forecast-based financing

Forecast-based financing (FbF) developed from a long-standing element in Climate Centre work: assisting the mainstreaming of the early warning early action model into Red Cross Red Crescent disaster management worldwide. 

It recognizes that there are often forecasts available but no humanitarian organization resourced to act before  disaster, especially when there is no certainty and a risk of acting in vain. 

With their governments support, the German Red Cross (GRC) secured flexible preparedness funds for actions specified in standard operating procedures. 

Twice-yearly dialogue platforms under the IFRC umbrella began in Geneva in July 2015 as part of a German Federal Foreign Office Action Plan on climate, coordinated by the GRC, centring on FbF pilots and operations by National Societies and the World Food Programme (WFP).

An outcome of that work is the FbF manual providing technical guidance for the design of interventions.

The Federal Foreign Office’s Action Plan also includes FbF pilots by the WFP or National Societies in Bangladesh, the Dominican Republic, Haiti, Mozambique, Nepal and the Philippines.

To support ongoing FbF interventions and other early warning early action work, a practical guide to interpreting and using seasonal forecasts has been produced through a collaboration by the BRACED and SHEAR programmes along with other partners including UK Met Office and the START Network.

FbF was jointly endorsed by UN OCHA and the IFRC, and also included in the International Federation’s special report ahead of the World Humanitarian Summit in Istanbul, as well as Secretary General Elhadj As Sy’s address at a high-level panel there on natural disasters and climate change.

The Netherlands government became the second to publicly support the groundbreaking concept, which has also been strongly advocated by the Australian Red Cross. 

In 2018, again with German government support, the IFRC added a new forecast-based action fund to its Disaster Relief Emergency Fund; it 
uses a combination of weather predictions and historical data to fix triggers for the automatic release of money for pre-agreed early action plans.

A technical discussion of forecast-based financing was published in the journal of the European Geosciences Union, and the Climate Centre has produced a report on research priorities with Reading University in the UK.

The Peruvian Red Cross (photo) produced a technical note on FbF work done on El Niño; FbF-related videos are being gathered in an album on our Vimeo channel.

A new research road map for FbF has been developed which outlines key research questions to address policy, strategic and operational gaps, and most recently a study was made of a potential forecast-based action mechanism for the Caribbean. 

A new guide “The Future of Forecast: Impact based Forecasting for Early Action” launched in September 2020,  offers a wider perspective on the world of Impact based Forecasting and its relevance to enable Forecast-based Financing. It has been developed by the UK Met Office, Climate Centre and partners as a contribution to the future of Impact based Forecasting as a key element in the process to act ahead of disasters (summary).