Ethiopia: Integrated Risk Financing to Protect Livelihoods and Foster Development

This activity report analyses the financial mechanisms available to both developed and developing countries, and their use, to transfer risks of weather related disasters. In developed countries, livelihood and asset losses sustained in natural disasters are often covered by international insurance, capital markets, or simply by government budgets that act as contingency funds. These ‘weather risk transfer tools’ protect livelihoods by facilitating timely support and thereby limiting the economic damage of disasters. Many developing countries are particularly exposed to natural disaster risk, but do not make use of these risk transfer instruments. WFP tries to promote their use because the consequences of climate change will cause the exposure to natural disasters and their severity to increase.