Forecast-based Financing is a new framework for “Early Warning Early Action” that solves two important problems:

• When an early warning arrives, humanitarian and development practitioners are not sure what to do – what actions are worthwhile to take based on a probability that an event might happen? For example, people are often afraid to act when they are not 100% sure that the extreme event will happen.
• There is normally no funding available for early action; it is only available for long-term development projects, or for post-disaster humanitarian response. Funds have only previously been allocated to enable forecast-based action on an ad hoc basis.

In contrast, FbF makes funding available on the basis of standard procedures developed by humanitarians in advance of a warning which clearly state what action will be taken based on which forecast. The processes for analysing forecasts and assessment of worthwhile actions are being trialled in pilot projects but need to be supported by further research. These are key to FbF; the standard procedures will automatically trigger the funding of actions when a forecast arrives, such that early warning always turns into early action.

– Alexandra Rüth, Climate Adaptation Coordinator, German Red Cross