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

Clarke, DanielColl-Black, SarahCooney, NaomiEdwards, Anna2016-07-072016-07-072016-06https://hdl.handle.net/10986/24636This 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: (i) specifying rules for when additional expenditures would be triggered in each woreda; (ii) specifying alternative risk finance strategies; and (iii) 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.en-USCC BY 3.0 IGOLIVING STANDARDSCONTINGENT LIABILITIESDEFICITHOUSEHOLD SURVEYUNCERTAINTIESPOVERTY LINELIABILITYPEOPLEOIL RESERVEFINANCIAL MANAGEMENTFINANCINGINTERESTRATE OF RETURNPOVERTY ESTIMATESCROP FAILUREINVESTMENT RATEINSURANCE PROGRAMINTEREST RATEEXCHANGEDISCOUNT RATEFINANCIAL RESOURCESCOST-EFFECTIVENESSPOLITICAL ECONOMYEXCLUSIONFINANCIAL COSTBONDSDISCOUNTALTERNATIVE RISK FINANCINGFEECLAIM PAYMENTSPAYMENTSSAVINGRESERVEFINANCIERBENEFICIARIESINTERNATIONAL BANKCASH FLOWSINSTRUMENTSINSURANCE MARKETSAFETY NETSINSURANCE COMPANYPOVERTY REDUCTIONBUDGETCOST EFFECTIVENESSDEPENDENTSAVINGSBENEFICIARYFINANCESEMERGENCY BUDGETOPTIONSFINANCIAL COSTSMARKET INSTRUMENTBORROWING RATETRANSFERSPAYMENTMARKETSDEBTCAPITAL MARKETRETURNESTIMATES OF POVERTYINTERNATIONAL DEVELOPMENTCHRONIC POVERTYRESERVESSENSITIVITY ANALYSESFOOD AIDINSURANCE POLICYFINANCEFUTURE CASH FLOWSBANK POLICYCONTINGENT LIABILITYFOOD ITEMSEXPENDITUREDEBT FINANCINGSAFETY NET TRANSFERSPOVERTY DATAOPPORTUNITY COSTFOOD SECURITYGOODCAPITALDROUGHTPAYMENT OBLIGATIONSOVEREIGN RISKMARKET CONDITIONSBASIC NEEDSLAST RESORTFUTUREVALUECLAIM PAYMENTBANKCHRONICALLY POORRETURNSDISASTER RISK FINANCINGBUDGETSCLIMATESAFETY NETFINANCIAL INSTRUMENTSFINANCIAL INSTRUMENTCONTRACTHOUSEHOLDEXPENDITURESCOST BENEFIT ANALYSISRURALINSURANCE PREMIUMFINANCIAL ANALYSISMARKETPUBLIC WORKSPREMIUM PAYMENTPOLICYIDIOSYNCRATIC SHOCKSINSURANCEFOOD INSECURITYECONOMIC DEVELOPMENTCHRONIC FOOD INSECURITYGOVERNMENT BONDSSECURITYINVESTMENTBONDDELIVERY INSTRUMENTSHOUSEHOLDSRURAL AREASPOVERTYALLOCATIONFINANCIAL LIABILITYBORROWINGINVESTMENTSPOORINSTRUMENTFAMILIESCROP LOSSLIABILITIESFOOD INSECURE HOUSEHOLDSGUARANTEESWAPBENEFITSCLAIMCATASTROPHE BONDA Methodology to Assess Indicative Costs of Risk Financing Strategies for Scaling Up Ethiopia's Productive Safety Net ProgrammeWorking PaperWorld Bank10.1596/1813-9450-7719