Anticipatory cash transfers in climate disaster response

This paper examines the welfare impact of an anticipatory cash transfer provided to households forecasted to experience extreme floods in Bangladesh. In the face of increasing climate volatility and stretched aid budgets, more effective ways to support households in times of crisis are needed. Evidence on the impact of a one-off transfer in a disaster are limited, despite the widespread use of such transfers in crises, reflecting more broadly a dearth of evaluations in the humanitarian sector. To assess impact, the authors exploit administrative constraints experienced during the programme roll-out caused by the quick onset of the flood and restrictions on movement as a result of Covid-19, to compare treated households with otherwise comparable households which did not receive the cash transfer.

The authors find that the anticipatory cash transfer was mostly spent on food and water, and that treated households were 36% less likely to go a day without eating during the flood. Three months after the flood, households that had received the transfer reported significantly higher child and adult food consumption and wellbeing. They also experienced lower asset loss, engaged in less costly borrowing after the flood, and reported higher earning potential. The results are robust to alternate control group definitions and model specifications. These benefits from the anticipatory cash transfer occurred before a traditional humanitarian response would normally arrive, highlighting the benefits of being early. The authors find that small changes in timing matter: receiving the cash a day earlier resulted in a small and marginally significant increase in welfare.