Forecast-based financing helps people prepare for disasters

When a cyclone hits Bangladesh, the water swallows up homes and lives. People try everything to save their families and few belongings, including precious livestock. And as this happens year after year, the water also swallows up hope.  

 

Last updated 4 August 2023

In the district of Bogra, Bangladesh, Alefa Katun, 40, was worried she’d have to sell her two cows during cyclone Yaas, which devastated large swathes of Bangladesh.

As cattle have nowhere to feed during floods, families like Alefa’s are forced to sell their livestock before the animals starve – often at a huge financial loss.

“They are two good cows and give a lot of milk. Healthy cows usually sell for around 60,000 Taka (a year’s salary)," Alefa said.

"But I would have received a very bad price for them during the flood – almost half of that.” Alefa explains.

Other families take out high-interest loans to buy feed for their livestock during floods, and to pay for the cost of evacuation and transportation for their families and belongings. These mounting debts affects can impact people’s livelihoods for a long time after the flood.

But new systems developed by the Red Cross and Red Crescent Movement – called forecast-based financing (FbF) – are helping people in Bangladesh better prepare for cyclones. This means that people like Alefa can evacuate her cows, her belongings and her family before extreme weather strikes. 

What is forecast-based financing and how does it work?

In a nutshell, FbF combines data and weather forecasts to predict extreme weather events and their impacts, and automatically releases money to act early.  

If it looks like an extreme weather event – such as a cyclone – is on course to hit communities, FbF activates a trigger agreed in an early action protocol.

This trigger automatically releases funding for a series of early actions, which allows local governments, charities, humanitarian agencies and communities themselves to spring into action and protect communities from disaster. 

By focusing on prevention, and not reaction, people can hold on to their families, belongings and dignity. And thanks to a FbF trial in her area, Alefa was able to evacuate her cows and feed them during the floods. 

So what do these early actions look like?

The Red Cross and our partners the Bangladesh Red Crescent have been working with communities in Bogra to understand the main problems they face during and after flooding.

They combine this feedback with surveys, studies and historical data to identify the best way to reduce the devastating impacts of flooding and those most at risk.  

When the weather forecast and other data tell us that a major cyclone is coming, the Red Crescent and other local organisations give people likely to be affected cash grants before the storm hits. They also get plastic containers and plastic bags to keep their belongings safe and to store clean water to use during the storm.   

For Anowara, 56, and her husband Amir Uddin, 62, receiving a cash grant from the Red Cross to buy enough food for themselves and their grandchild made the world of difference during the floods. 

"We bought 40 kilos of rice and 20 kilos of grains, that was enough to make it through the hard weeks.  

“We didn't have to take on any debts," says Amir. Anowara could even buy a little goat for the family.” 

Amir and Anowara were part of a pilot project for forecast-based financing in Bangladesh funded by our partners the German Red Cross.

Its success shows that FbF can have a big impact on keeping families safe and making sure they don’t lose their homes and livelihoods in a cyclone or other disaster.