A Methodology to Assess Indicative Costs of Risk Financing Strategies for Scaling Up Ethiopia's Productive Safety Net Programme

Proposes a methodology to assess the economic cost of sovereign risk finance instruments

Abstract

This paper proposes and illustrates a methodology to assess the economic cost of the sovereign risk finance instruments available to the Government of Ethiopia and its development partners for financing the shock-responsive scalability component of the Productive Safety Net Programme. The methodology involves:

  1. specifying rules for when additional expenditures would be triggered in each woreda;
  2. specifying alternative risk finance strategies; and
  3. analyzing the costs of each risk financing strategy, including sensitivity and scenario testing of the results

The methodology is applied to a hypothetical set of rules for drought-responsive scalability, and a range of potential risk finance strategies.

This working paper received financial support from the Department for International Development’s Humanitarian Innovation and Evidence Programme (HIEP) Sovereign Disaster Risk Finance and Insurance Project

Citation

Clarke, Daniel. ; Coll-Black, Sarah. ; Cooney, Naomi. ; Edwards, Anna. ; A Methodology to Assess Indicative Costs of Risk Financing Strategies for Scaling Up Ethiopia’s Productive Safety Net Programme. Policy Research Working Paper;No. 7719. World Bank, Washington, DC. © World Bank. (2016) https://openknowledge.worldbank.org/handle/10986/24636 License: CC BY 3.0 IGO

A Methodology to Assess Indicative Costs of Risk Financing Strategies for Scaling Up Ethiopia’s Productive Safety Net Programme

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