Why anticipatory insurance is the next frontier for climate aid (Energy Monitor)
- Impact Area
Energy Monitor writes in a report that climate change is making hurricanes, flooding, and other big natural disasters more frequent and more severe. There is growing acknowledgment that the traditional humanitarian response to these events is no longer fit for purpose. Many in the aid sector are pushing the idea of acting earlier, leveraging technological advances and existing solutions to forecast, plan for and respond to natural hazards before they become catastrophes.
In an International Food Policy Research Institute discussion paper, titled Five years of regional risk pooling: an updated cost-benefit analysis of the African risk capacity, the authors estimated that every dollar spent on one of the ARC’s premiums delivers the equivalent of $1.90 spent on traditional humanitarian response six-to-nine months later. The study assumed pre-agreed contingency plans would reduce the costs of delivering humanitarian assistance to the poor while improving the speed and targeting associated with the delivery of those benefits. When the long-term benefits are factored in, the additional benefits to poor households could rise to above $4.