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Early warning Early action Early recovery: the C ommunity E arly R ecovery Vo ucher CERVO

The Community Early Recovery Voucher (CERVO) provides predictable and timely benefits to vulnerable people affected by natural disasters. It is delivered through a trusted channel and is triggered by objective weather data. Standardized payouts are targeted to communities that reduce disaster risk systematically. Costs are covered by small transaction fees, government, and donors.

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Early warning Early action Early recovery: the C ommunity E arly R ecovery Vo ucher CERVO

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  1. WFP 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

  2. 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

  3. 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

  4. 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

  5. Hurricane Example: Belize 50 mile radius Index: Storm Tracker products (NOAA, others)

  6. 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

  7. Drought Example: El Salvador Basis: 12 month Standard Precipitation Index Payouts for: • Severe drought: $US 50 • Extreme drought: $US 100 • Catastrophic drought: $US 200

  8. Distribution • Rural Post Offices, Banks • Microfinance institutions (possibly via Smart Cards), • Agricultural cooperatives, Input suppliers, Traders • WFP offices, sub-offices, associated NGOs

  9. Risk transfer payments $ Donor + Gov Matching funds Master CERVO Community

  10. CERVO Payouts

  11. 5 USD 2 USD 2 USD 8 USD 1 USD CERVO cost sharing CAT Risk Transfer Bond? Risk Pooling Donor and Premium funded Climate Change Total Risk Transfer Cost CC adaptation funds “Normal” pure Risk Premium (average payout) Government + Donors premium support Final Cost for household

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